Chapter 4
Organizations and Change Management
Learning Objectives
 Illustrate how internal influences create unique
types of cultures
 Describe and compare general and specific
external environments
 Explain how managers analyze challenges and
opportunities in organizations
 Summarize the common reasons why managers
change how their organizations operate
 Summarize how managers change organizations by
intervening in systems
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Introduction (p. 86)
 Internal environment
• Comprises the forces inside an organization that affect
how managers set expectations, how employees
perform their roles, and how the company interacts
with stakeholders and responds to external
environments
• Emphasized by management-focused capitalism
 External environment
• Specific and general factors outside an organization
that can change how it operates
• Emphasized by customer-focused capitalism
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Introduction (cont.)
Figure 4.1
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Internal Environment (p. 87)
 Organizational culture
• Collection of beliefs, shared by individuals and groups,
to help their organization to respond to environmental
forces and changes
• Experienced at the:
 Conscious level – can be
seen or heard openly (p. 88)
 Unconscious level – things
that employees think or feel
Figure 4.2
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Internal Environment (cont.)
 Organizational culture (cont.) – manifest in:
• Slogan – repetitive phrase intended to support an
organizational culture, mission, vision, or values (p. 88)
• Story – narrative, usually fictionalized or enhanced over time,
based on actual organizational experiences
• Symbol – event, situation, object, person, or other artifact that
provides greater meaning to the organization (p. 89)
• Ritual – formalized activity intended to communicate and
teach the organization’s culture
• Ceremony – event that provides one or more stakeholders with
a sense of purpose and meaning connected to the organization
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Internal Environment (cont.)
 Organizational culture (cont.) – manifest in:
• Heroes – real or imagined person who represents an
ideal performer specific to the organizational culture
(p. 90)
 Stages in a hero’s journey
Figure 4.3
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Specific Environment (p. 91)
 Industry-focused part of the external environment that
directly affects an organization’s operations and
performance
 Customers – needs responded to by:
• Reactive engagement – modify products and services based
on customer feedback
• Proactive engagement – create alternative product/service
to enhance customer’s experience
• Interactive engagement - collaborate with customers to
develop products/services better suited to their needs
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Specific Environment (cont.)
 Talent (p. 92)
• People who have the skills, knowledge, creativity, and
relationships necessary to optimize an organization’s
performance
• Crowdsourcing – companies employ the efforts of its
customers and the public to innovate and further its mission
 Advocacy group (p. 93)
• Set of people dedicated to instituting change based on their
concerns or interests
• Boycott – attempt by an individual or group to change the
actions of an organization by convincing other customers not
to purchase the products or services
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Specific Environment (cont.)
 Suppliers (p. 94)
• Entities that provide an organization with the external
resources that it needs to operate, including money, materials,
people, and information
 Regulation (p. 95)
• Rules set by external governing bodies that dictate standards
and procedures for industries, businesses, and professionals
• Government activism – role played by government in
“encouraging” business to behave in ways that are in the
public interest through tax credits and other incentives (p. 96)
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Specific Environment (cont.)
 Competitors (p. 97)
• Organizations that sell comparable products and
services
• Competitive analysis – attempt to understand the
features and benefits of competitor’s products and
services
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General Environment (p. 98)
 External forces that affect all organizations
participating in an economy, where managers
have little or no power to effect change
 Politics/laws
• Relate to most, if not all, businesses, and not just to
those in a particular industry
• Citizens United
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General Environment (cont.)
 Resources (p. 98)
• Demand influenced by the world population
Figure 4.6
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General Environment (cont.)
 Resources (cont.)
• Energy (p. 100) - projected world energy consumption
Figure 4.7
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General Environment (cont.)
 Resources (cont.)
• Water (p. 101) – an increasingly wasted resource
Figure 4.8
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General Environment (cont.)
 Technology (p. 101)
• Speed of technology innovation requires managers
to assess and adapt continuously to its impact
 Sociocultural forces (p. 102)
• Behaviors and beliefs associated with demographic
groups that comprise an organization’s available
talent and customers
 Demographics – sociological characteristics that define
an organization’s talent and customers (e.g., age, gender,
ethnicity)
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General Environment (cont.)
 Economy (p. 102)
• Orchestrated system of talent, resources, and money
intended to create and distribute products and services
• “Stock market
indexes”
Figure 4.9
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General Environment (cont.)
 Economy (cont.)
• Gross domestic product (GDP) – value of what a
country produces on an annual basis (p. 104)
 Represents the size of the economy as a number
(nominal) or per person (capita)
 Internet and e-commerce have enabled countries around
the world to exchange services easily
 Leads to rapid expansion of economies
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General Environment (cont.)
 World economies – nominal GDP
Figure 4.10
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General Environment (cont.)
World economies – per capita GDP
Figure 4.10
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How Do Managers Change
Organizations? (p. 106)
 Change management
• Achieving goals by altering behaviors or processes
in response to environmental forces
 Resistance to change stems from:
•
•
•
•
•
Threat to personal interests
Uncertainty about meaning of change
Mistrust of those initiating change
Doubts about ability to cope with changes (p. 107)
Clashing perspectives among different people
about the change
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How Do Managers Change
Organizations? (cont.)
 Driving and restraining forces (p. 107)
• Force-field analysis - Kurt Lewin
 Driving forces – provide motivation for achieving a
goal
 Restraining forces – barriers to change that impede
progress to the goal (p. 108)
 Assess the need for change and identify the potential
obstacles that may have to be overcome to achieve
change
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How Do Managers Change
Organizations? (cont.)
 Stages of change (p. 108)
• Unfreezing – process of informing employees of
the change and why it is needed
 Change agents – specialists who facilitate change by
identifying problems and preseenting them to
management
• Changing – a strategy for employees to help
reinforce the need for change
• Refreezing – people embrace the change and are
rewarded for their commitment and participation in
making the change happen
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How Do Managers Change
Organizations? (cont.)
 Leading change: Eight steps for implementing change
(p. 109)
•
•
•
•
•
•
•
•
Putting the pressure on
Forming a guiding coalition
Creating a vision
Using widespread communication
Overcoming obstacles
Celebrating short term wins
Assessing the transformation process
Instilling change in the corporate culture
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