Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any...

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Certification Study Group Managing Change

Transcript of Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any...

Page 1: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Certification Study Group

Managing Change

Page 2: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

The Nature of Organization Change Organization Change

Any substantive modification to some part of the organization (e.g., work schedules, machinery, employees).

Forces of Change External and Internal

Page 3: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

The Nature of Organization Change Forces for Change

External forces in the organization’s general and task environments that force the organization to alter the way in which it competes.

Internal forces inside the organization that cause it to change its structure and strategy; some internal forces are responses to external pressures.

Page 4: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

The Nature of Organization Change Planned Change

Change which is designed and implemented in an orderly and timely fashion in anticipation of future events

Reactive Change Change which is a piecemeal response

to circumstances as they develop

Page 5: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Managing Change in Organizations

Steps in the Change Process (Lewin Model) Unfreezing – Individuals must be shown why

the change is necessary. Implementing change – The change itself is

implemented Refreezing – Involves reinforcing and

supporting the change so that it becomes a permanent part of the system.

Page 6: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Steps in the Change Process

Establishment of goals for the change

Recognition of the need for change

Evaluation and follow-up

Diagnosis of relevant variables

Planning for implementation of the change

Selection of appropriate change technique

Actual implementationA Comprehensive Approach to Change

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Reasons for Resistance to Change

Barney, Jay B. and Ricky W. Griffin, The Management of Organizations. Copyright © 1992 by Houghton Mifflin Company. Used with permissions.

Page 8: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Resistance to Change

Uncertainty about the extent and effects of change.

Threats to self-interests, power, and influence.

Different perceptions of change effects and outcomes.

Feelings of loss in disrupted social networks, power, security, and familiarity with existing procedures.

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Overcoming Resistance to Change in Organizations

Barney, Jay B. and Ricky W. Griffin, The Management of Organizations. Copyright © 1992 by Houghton Mifflin Company. Used with permissions.

Page 10: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Overcoming Resistance to Change Encourage active participation in the

change process. Provide education and

communication about the change process.

Facilitate the change process by making only necessary changes, announcing changes in advance, and allowing time to adapt to change.

Page 11: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Overcoming Resistance to Change Force-field analysis, in which the

forces for and against the change are delineated and the forces against the change are minimized, can be used to reduce resistance to change.

Page 12: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Overcoming Resistance to Change

Force-Field Analysis for Plant Closing at General Motors

Outmoded production facilities

Excess capacity

Need to cut costs

Reasons for Closing

Possible future needs

Concern about worker welfare

Resistance from unions

Plant

closing

Reasons Against Closing

Figure 7.2

Page 13: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Certification Study Group

Logical Thinking Patters

Page 14: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Characteristics of Inductive Reasoning Unlike deductive reasoning, Inductive

reasoning is not designed to produce mathematical certainty. Induction occurs when we gather bits of specific information together and use our own knowledge and experience in order to make an observation about what must be true. Inductive reasoning does not use syllogisms, but series of observations, in order to reach a conclusion.

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Characteristics of Inductive Reasoning Consider the following chains of

observations: Observation: John came to class late

this morning.

Observation: John’s hair was uncombed.

Prior experience: John is very fussy about his hair.

Conclusion: John overslept

Page 16: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Characteristics of Deductive Reasoning A deductive argument offers two or

more assertions that lead automatically to a conclusion. Though they are not always phrased in syllogistic form, deductive arguments can usually be phrased as "syllogisms," or as brief, mathematical statements in which the premises lead inexorably to the conclusion. The following is an example of a sound deductive sullogism.

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Characteristics of Deductive Reasoning

Premise: All dogs have four legs.

Premise: Rover is a dog, Conclusion: Rover has four legs.

Page 18: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Characteristics of Deductive Reasoning As long as the first two sentences in this

argument are true, there can be no doubt that the final statement is correct--it is a matter of mathematical certainty. Deductive arguments are not spoken of as "true" or "false," but as "sound" or "unsound." A sound argument is one in which the premises guarantee the conclusions, and an unsound argument is one in which the premises do not guarantee the conclusions. A deduction can be completely true, yet unsound. It can also be sound, yet demonstrably untrue.

Page 19: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Certification Study Group

Organizational Planning

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Plans

By Level Strategic Tactical Operational

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StrategicStrategic

TacticalTactical

OperationalOperational

ManagerOperations

V ice PresidentOperations

D irectorAdvertising

V ice PresidentMarketing

ManagerAccounting

V ice PresidentFinance

President and CEO

Planning by Organizational Level

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Time Frames for Planning The Time Dimension of Planning

is based on the principle of commitment. Planning must provide sufficient time to fulfill the managerial commitments involved.

Long-range Plans Intermediate Plans Short-range Plans

Page 23: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

The Nature of Strategic Management Strategy

A comprehensive plan for accomplishing an organization’s goals.

Strategic Management A way of approaching business

opportunities and challenges A comprehensive and ongoing

management process aimed at formulating and implementing effective strategies.

Page 24: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

The Components of Strategy

Distinctive Competence Something an organization does exceptionally

well. Resource Deployment

How an organization will distribute its resources across the areas in which it competes.

Scope Specifies the range of markets in which an

organization will compete.

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Types of Strategic Alternatives

Business-level Strategy How the organization conducts

business in a particular industry. Corporate-level Strategy

The set of strategic alternatives that an organization chooses from as it manages its operations simultaneously across several industries and several markets.

Page 26: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Types of Strategic Alternatives

Strategy Formulation The set of processes involved in creating or

determining the organization’s strategies; it focuses on the content of strategies.

Strategy Implementation The methods by which strategies are

operationalized or executed within the organization; it focuses on the processes through which strategies are achieved.

Page 27: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Formulation and Implementation Across Strategic Alternatives

Corporate Strategy Corporate Strategy FormulationFormulationDecisions about which Decisions about which markets to compete inmarkets to compete in

Business Strategy Business Strategy FormulationFormulationDecisions about how to Decisions about how to compete in each marketcompete in each market

Functional Strategy Functional Strategy FormulationFormulationDecisions about how to Decisions about how to address each function address each function within the organizationwithin the organization

ImplementationImplementationCarrying out the functional-Carrying out the functional-level strategies chosenlevel strategies chosenfor each business functionfor each business function

ImplementationImplementationCarrying out the business-Carrying out the business-level strategies chosen for level strategies chosen for each businesseach business

ImplementationImplementationCompeting in the markets Competing in the markets via existing operations, via existing operations, mergers, acquisitions, new mergers, acquisitions, new ventures, divestituresventures, divestitures

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SWOT Analysis

Strengths Weaknesses Opportunities Threats

MissionAn organization’s fundamental purpose

Best Strategies

SWOT AnalysisTo formulate strategies that support the mission

Those that support the mission and• exploit opportunities and strengths• neutralize threats• avoid (or correct) weaknesses

Internal AnalysisStrengths(distinctivecompetencies)

Weaknesses Threats

External AnalysisOpportunities

Page 29: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Using SWOT Analysis to Formulate Strategy

Evaluating Organizational Strengths Organizational strengths Distinctive competencies Sustained competitive advantage

Evaluating Organizational Weaknesses Organizational weaknesses Competitive disadvantage

Page 30: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Using SWOT Analysis to Formulate Strategy

Evaluating an Organization’s Opportunities and Threats Organizational opportunities

are areas in the organization’s environment that may generate

high performance.Organizational threats are areas in the organizations environment that make it difficult for the organization to achieve high performance

Page 31: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Using a SWOT Analysis to Formulate Strategy … An Example

OpportunitiesOpportunitiesHigh growth in market High growth in market for low-cost lodgingfor low-cost lodging

StrengthsStrengthsSolid hotel businessSolid hotel businessSolid food servicesSolid food services

WeaknessesWeaknessesPoor performance in Poor performance in cruise ship, travel cruise ship, travel agency, and theme agency, and theme parksparksWeak cash positionWeak cash position

ThreatsThreatsLow growth in the Low growth in the market for high-market for high-cost lodgingcost lodging

EnvironmentalEnvironmental AnalysisAnalysis

OrganizationalOrganizational AnalysisAnalysis

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Porter’s Generic Strategies Differentiation strategy Overall cost leadership strategy Focus strategy

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Porter’s Generic Strategies … Examples Differentiation

Nordstrom’s Overall Cost Leadership

Wal-Mart Focus

Gucci

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Strategies Based on Product Life Cycle The Product Life Cycle

Introduction

Time

Stages

Growth Maturity Decline

High

Low

Sal

es V

olum

e

Figure 3.3

Page 35: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Strategies Based on the Product Life Cycle Product life cycle: a model that

portrays how sales volume for products changes over the life of products. Introduction Stage Growth Stage Mature Stage Decline Stage

Page 36: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Formulating Corporate – Level Strategies – Base Concepts

Each business or set of businesses within such a firm is frequently referred to as a strategic business unit, or SBU.

Diversification The number of businesses an

organization is engaged in The extent to which these businesses

are related to one another

Page 37: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Formulating Corporate – Level Strategies

Single Product Strategy No diversification involved Organization sells one

product/service in a single market

Page 38: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Formulating Corporate – Level Strategies

Related Diversification A strategy in which an organization

operates in several different businesses, industries, or markets that are somehow linked.

Page 39: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Related Diversification Bases of relatedness — bases include

common technology, common distribution networks, common marketing skills, common brand names and reputation, and common customers.

Basis of Relatedness Examples

Similar technology Phillips, Boeing, Westinghouse, Compaq

Common distribution and marketing skills RJR Nabisco, Phillip Morris, Procter & Gamble

Common name brand and reputation Disney, Universal

Common customers Merck, IBM, AMF-Head

Page 40: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Related Diversification Advantages of Related

Diversification Reduces organization’s dependence

on any one of its business activities and thus reduces economic risk.

Reduces overhead costs associated with managing any one business through economies of scale and economies of scope.

Page 41: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Related Diversification Advantages of Related

Diversification Allows an organization to exploit its

strengths and capabilities in more than one business.

Synergy exists among a set of businesses when the businesses’ value together is greater than their economic value separately.

Page 42: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Formulating Strategy -Unrelated Diversification

Unrelated Diversification When an organization operates several

businesses that are not associated Advantages

Stable performance over time Resource allocation spread over more

than one industry Reduced business cycle risk

Page 43: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Formulating Strategy Unrelated Diversification

Disadvantages Strategy does not usually lead to high

performance due to the complexity of managing a diversity of businesses

Firms with unrelated strategies fail to exploit important synergies, thus are at a competitive disadvantage to firms with related diversification strategies

Most organizations have now abandoned this strategy

Page 44: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Managing Diversification Major Tools for Managing Diversification

Portfolio management techniques Methods that diversified organizations use to

make decisions about what businesses to engage in and how to manage these multiple businesses to maximize corporate performance.

Two important portfolio management techniques

The BCG Matrix The GE Business Screen

Page 45: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

BCG Matrix Provides a framework for evaluating

the relative performance of businesses in which a diversified organization operates.  

Uses two factors to evaluate a firm’s set of businesses: market growth rate and market share.

The matrix classifies the types of businesses that a diversified firm can engage in.

Page 46: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

BCG Matrix It helps managers to develop a better

understanding of how different strategic business units contribute to the overall organization.

By assessing each SBU on the basis of its market growth rate and relative market share, managers can make decisions about whether to commit further financial resources to the SBU or to sell or liquidate it.

SBU stands for …………………………….

Page 47: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

The BCG Matrix

Relative market share

Cash cows Dogs

High

Low

High Low

Questionmarks

Stars

Mar

ket

gro

wth

rat

e

Source: Perspectives, No. 66, “The Product Portfolio,” Adapted by permission from The Boston Consulting Group, Inc., 1970.

Page 48: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

BCG Matrix Dogs are businesses that have a very small

share of a market that is not expected to grow.

Cash cows are businesses that have a large share of a market that is not expected to grow substantially.

Question marks are businesses that have only a small share of a quickly growing market.

Stars are businesses that have the largest share of a rapidly growing market.

Page 49: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

GE Business Screen A method of evaluating businesses

along two dimensions: (1) industry attractiveness and (2) competitive position

The GE Business Screen is a more sophisticated approach to portfolio management than the BCG Matrix

Page 50: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

GE Business Screen A method of evaluating business in a

diversified portfolio along two dimensions, each of which contains multiple factors:

Industry attractiveness. Competitive position (strength) of each firm in the

portfolio.

In general, the more attractive the industry and the more competitive a business is, the more resources an organization should invest in that business.

Page 51: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

The GE Business Screen

Competitive position

Low

Winner

Medium

High

Good

Competitive position1. Market share2. Technological know-how3. Product quality4. Service network5. Price competitiveness6. Operating costs

Industry attractiveness1. Market growth2. Market size3. Capital requirements4. Competitive intensity

PoorMedium

Winner

Profitproducer

Winner

Averagebusiness

Loser

Questionmark

Loser

LoserInd

us

try

gro

wth

ra

te

In general, the more attractive the industry and the more competitive the position, the more an organization should invest in a business.

Page 52: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Tactical Planning

An organized sequence of steps designed to execute strategic plans

Tactical plans are to battles what strategy is to a war

Strategy focuses on resources, environment, and mission, whereas tactics focus primarily on people and action

Page 53: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Tactical Planning Developing and Executing Tactical Plans

Developing tactical plans

• Recognize and understand

overarching strategic plans

and tactical goals

• Specify relevant resource and

time issues

• Recognize and identify human

resource commitments

Executing tactical plans

• Evaluate each course of action

in light of its goal

• Obtain and distribute

information and resources

• Monitor horizontal and vertical

communication and integration

of activities

• Monitor ongoing activities for

goal achievement

Page 54: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Operational Planning

Single Use Plans – A plan that is not likely to be used again in the near future. Program plan Project plan

Standing Plans - a plan for activities that recur regularly over a period of time Policy Standard Operating Procedure Rules and Regulations

Page 55: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Contingency Planning

The determination of alternative courses of action to be taken if an intended plan is unexpectedly disrupted or rendered inappropriate.

Page 56: Certification Study Group Managing Change. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization.

Action Point 1:Action Point 1:

Action Point 2:Action Point 2:

Action Point 3:Action Point 3:

Action Point 4:Action Point 4:

Develop plans, considering Develop plans, considering contingency eventscontingency events

Implement plans and formally Implement plans and formally identify contingency eventsidentify contingency events

Specify contingency event Specify contingency event indicators and develop plans for indicators and develop plans for each eventeach event

Successfully complete each plan or Successfully complete each plan or contingency plancontingency plan

The Contingency Planning Process - An Ongoing Process