Organisation Change And Development

Organisation Change and Development

Organisation change and development:

Introduction:

Organisation change is a continuous process and it is fundamental for an organisation to undertake change that helps the organisation to survive, changes are of various forms and any organisation will undertake change in order to improve performance. Acquisition is one type of initiating change in an organisation. Most acquisitions will be aimed at expanding a company and therefore gaining more profits through economies of scale and the expansion of market share. For this reason therefore companies will choose which companies to acquire and negotiations take place which oversee the purchase of the company.

This paper discusses types of changes and the theories that tend to explains change in an organisation, other discussions include the motives of acquisition and how the company gains through acquisition. We also discuss the changes that are expected to occur in the organisation if acquisition is successful.

1/13

Organisation Change and Development

Organisation change:

Organisation change can be seen where the organisation reorganises or improves their products with new products and service, change is fundamental in the achievement of progress in the organisation, the following are some types of changes that occur in an organisation and they include organisation wide change, transformation change, incremental change, remedial change, developmental change, unplanned change and planned change.

a) Organisation wide change:

One example of organisation wide change is cultural change, in organisation wide change the organisation undertakes changes in order to evolve into a defined level which will lead to the organisation achieving a stable and planned development. An example of such a change is acquisition and mergers, this type of change will create a more stable organisation and will also lead to development.

b) Transformation change:

This change occurs in an organisation whereby the organisation adopts new structure and culture example from traditional forms of organisation to hierarchical form of organisational structure. This type of changes will occur as a result of new forms of structure of organisation where new structure is considered to be more effective than existing structures. Organisation culture is also an important aspect of an organisation and change in culture is fundamental in an organisation.

c) Incremental change:

2/13

Organisation Change and Development

This change can be seen as a continuous improvement in quality management, this type of change is evident where the organisation adopts more efficient management practices. Incremental changes are therefore important to an organisation in that these types of changes will lead to more effective and efficient management in an organisation which will in turn lead to more profits.

d) Remedial changes:

This change occurs for the purpose of solving a current problem that faces an organisation. Therefore this change occurs as a remedy to a problem. The success of these changes can be easily determined because we are able to observe whether the problems are solved. This type of change will occur when the organisation faces problems.

e) Developmental change:

These changes occur when an organisation tend to make a successful organisation into even more successful, this type of change is important in the organisation in that it seems to be a growth strategy type of change where the company aims at even gaining more even if it is still gaining from its business undertakings.

f) Unplanned change:

3/13

Organisation Change and Development

These changes occur due to a sudden event in the organisation, example a poor product which leads to a loss in customers will force the organisation to initiate change. These types of changes may pose a problem to the organisation whereby the changes occur in such a way that the organisation is taken by surprise, for example the rejection of a new product by the consumers.

g) Planned change:

This type of change occurs when the leads of the organisation realise the need to implement major changes in the organisation. Planned changes are initiated by organisation leaders who implement changes that are aimed at achieving a certain objective.

Theories of organisation change:

There are a number of theories that explain changes in an organisation, all the theories have a different perspective toward change and they are discussed below, these theories include the system theory, the organisation development theory, the social world’s theory and the complexity theory.

I. Systems theory:

The system theory states that the system comprises of four things which include, the object, attributes, relationship and the environment, according to this theory a system will exist in an environment but however there exist two types of systems which include the open system and the closed system, the open system interacts with the environment and has a high possibility of survival and prosperity. The closed system does not interact with the environment.

4/13

Organisation Change and Development

This theory with reference to the organisation states that there exists parts of the organisation that are interrelated with one another, a change in one part will result into a change in another part and for this reason before the implementation of changes in an organisation there is need to consider the likely changes that will occur in the organisation.

Organisation change according to this theory can therefore be induced by altering some variables either combined variables or single variables.

II. The Organisational development theory:

According to this theory Organization development is a process which organizations develop their internal capacity to achieve their objectives more effectively and efficiently, Richard Beckhard defined organisation development as planned effort, to increase the organization effectiveness. According to this theory therefore change in the organisation is by leaders of the organisation and this is done through considering organisation goals and the decisions of the individuals.

The success of change in an organisation according to this theory will depend on the agreement between the organisation goals and individuals. Therefore this theory emphasises the importance of communication, empowerment and team work in an organisation which will help achieve successful change in the organisation.

III. Complexity theory:

The complexity theory views organizations as collections of strategies and structures, further it states that as organisations share properties of other adaptive systems then they are more likely to survive because they adopt to the environment, this theory suggest that change results from interaction with the environment and that an organisation has to adopt in order to survive.

IV. The social world theory:

5/13

Organisation Change and Development

This theory suggest that change occurs as a result of negotiations, this is as a result of the need to improve on existing activities to achieve quality, for this reason therefore the theory explains changes in an organisation as a result of considering the improvement of quality of existing products and services, this in order to meet the goals and objectives of the organisation.

Acquisition:

Acquisitions refers to an aspect of strategy dealing with buying and selling companies that can aid a company in a given industry to grow more rapidly without creating other business entity. Acquisitions are also referred to as takeovers, this involves the buying a company by another company, in most cases larger firms will buy smaller companies but in some cases there is a case where smaller firms takeover large firms and this is referred to as reverse takeover. There are two types of acquisitions and they include buying shares and the other type is buying assets.

1. Buying shares:

In this type of acquisition the company buys shares of a company and therefore gains control over it, however this type of acquisition carries with it the risks and all past liabilities of the company because it is acquired as an ongoing business.

1. Buying assets:

This involves buying all the assets of a company, the sold company share holders are paid through dividends from the amount paid by the purchasing company. However the purchasing company will choose which assets it will buy and leaves out those assets which it dos not

6/13

Organisation Change and Development

require. However this type of acquisition does not carry with it the risks and all past liabilities of the company because a comp[any will choose which assets to purchase.

Motives behind acquisition:

– Scale economies:

Scale economies will be realised by a firm whereby the firm will be in a position to reduce the duplicate operations or departments, this will lower the costs of production whereby the departments and operations that are undertaken in the company are managed by a small number of people and this will result to increased profits. Example a two companies will employ each an administration department with 5 employees each but if one company acquires the other company the new company will only require the 5 employees only thereby reducing costs and the company will realise economies of scale.

– Increasing revenue:

The motive of acquisition are to increase revenue and profits, this is based on the fact that the company will absorb its competitor and therefore increase its market power whereby it can increase its market share.

– Tax liability:

7/13

Organisation Change and Development

A successful company can choose to buy another firm that makes losses for the purpose of reducing tax liability, in many countries companies will purchase other companies that make losses for the purpose of reducing tax liability.

Advantages of acquisition:

Acquisitions take place with certain motives and these motives are associated with potential advantages that can be gained through acquisitions, there are a number of advantages associated with acquisition and they include:

Competitive advantage:

The organisation is more likely to survive according to the complexity theory where the firm adopts to the environment, therefore through acquisition the firm will be in a better position to survive in the market as a result of economies of scale and its ability to control a large part of the market where its market share expands.

1. Expansion:

Further expansion of the organisation in terms of resources, market share and opportunity, when the firm acquires another firm that was previously it rival it will be in a position to increase its market share, resources of production and increased opportunity for survival.

1. Increased employment levels:

8/13

Organisation Change and Development

There will be increased employment in the companies resources, these resources will include fixed resources and assets which were not fully utilised and for this reason the company will realise economies of scale.

Will induce positive change which is fundamental to survival of organisation

1. Increased opportunity to          diversify and expand

Acquisition will induce positive change which is fundamental to survival of organisation, the acquisition plan therefore offers the organisation an opportunity to expand in terms of production and diversify in business undertakings.

1. Enhancing competition in the          market:

The organisation will expand in terms of capacity and competitive advantage over its rivals, as a result the organisation gains competitive advantage.

1. Improved financial performance:

The organisation experiences an improvement in its financial performance. This is evident where there is an increase in cash flow and sales turnover.

1. Elimination of environment          liabilities:

9/13

Organisation Change and Development

The organisation eliminates environmental liabilities through acquisition, this occurs when an organisation will eliminate its competitors through acquisition.

1. Opportunity for a new start:

Acquisition offers the organisation an opportunity to start afresh in it business undertaking, this gives an opportunity to make sound decisions that aid in the achievement of goals.

1. Means of recovery:

Acquisition offers an organisation an opportunity for recovery because it acquires an asset that can be sold which is far much better than loans and grants.

The above are only some advantages associated with acquisition there are other advantages associated with acquisition which can be realised by the purchasing firm, therefore an appropriate acquisition will lead to numerous advantages which are mentioned above and this advantages will lead to rapid growth of the organisation.

Expected change:

There are number of changes that are expected to occur in the organisation once the acquisition takes place, some of these changes include:

More employees:

The firm will increase the number of employees as a result of acquisition. This is because the

10/13

Organisation Change and Development

firm will have to employ more workers who will work in the organisation as a result of expansion.

Increased complexity in management of organisation:

More workers in the organisation will mean that the firm will experience an increased complexity in management. This is due to the increased number of workers which makes management complex.

Increased production and product diversity:

Acquisition means that the firm will expand its production and for this reason the firm will expand and also it is likely the firm will diversify in the products and services it produces.

Expansion of organisation

Expansion of the organisation will occur in terms of level of production and capital accumulation.

11/13

Organisation Change and Development

Conclusion:

Organisation change is fundamental in the achievement of progress in the organisation, some types of changes that occur in an organisation and include organisation wide change, transformation change, incremental change, remedial change, developmental change, unplanned change and planned change.

Organisations wide change occurs when an organisation undertakes change in order achieve a stable and planned development, Transformation change occurs when the organisation adopts a new structure and culture, Incremental change occurs when the organisation initiates continuous improvement in quality management, Remedial changes occurs for the purpose of solving a problem that is facing the organisation and Developmental change occur when the organisation tend to be even more successful than it is.

Theories of organisation change include the system theory, the organisation development theory, the social world’s theory and the complexity theory, The system theory states that Organisation change is induced by altering some variables either combined variables or single variables. The Organisational development theory states that change is a process which organizations develop their internal capacity to achieve their objectives effectively and efficiently.

The complexity theory states that the organizations is a collections of strategies and structures and that change is as a result of interaction with the environment and according to the social world theory change occurs as a result of negotiations.

Acquisition can be defined as the buying of a company by another company, there are two types of acquisitions and they include buying shares where a company buys shares of a company and therefore gains control over it, the other type of acquisition involves Buying assets where a company buys assets of another company, the sold company share holders are paid through dividends and that the purchasing company will choose which assets it will buy and those assets it will leave out.

Advantages of the proposed acquisition include increased Competitive advantage, Enhancement of competition in the market, improved financial performance, elimination of environment liabilities, Opportunity for a new start, Means of recovery. The expected change in the organisation includes more employees, increased complexity in management of organisation, increased production and product diversity and expansion of organisation.

12/13

Organisation Change and Development

From our above discussion it is clear that the organisation will gain from the acquisition plan, some of these gains will include the realisation of economies of scale, increased market share, more earnings and an opportunity to expand.

References:

Bertalanffy L. (1998). General systems theory, Sage publishers, London

Woodman W (1989) Organizational change and development, a new arena for inquiry and action, Journal of Manage (15) 205 to 208

Sparrow R. (1994) Organizational competencies: Assessment and selection in an organization, John Wiley and sons publishers

13/13