BU1104
BU1104
BU1104
• Managing Change
Textbook chapters: 7 (pp. 119 –
125) 9, 10
Recap of Week 6 Topics
1. Review of Management Functions Planning, Organising, Leading, Controlling
1. What organising is ?
2. Four departmentalisation approaches to organisational
structure & team structure
3. The factors that influence organisational
design/structure focusing on strategy and environment
4. Kurt Lewin’s 3 step approach to organisational change.
5. The 5 stages of organisational decline.
6. Different methods that managers can use to minimise
resistance to change.
Why study Organising?
Deciding:
where decisions will be made
who will do what jobs and tasks
who will work for whom
Organisation Structure
Types include:
1. Functional departmentalisation
2. Product departmentalisation
3. Geographic departmentalisation
4. Customer (client-based)
departmentalisation
Newer organisation structures
Team structures
Network structures
Functional Departmentalization
Advantages:
• Managers specialise, but have broader experiences &
expertise related to an entire product line
• Easier to assess work-unit performance.
• Decision making is faster.
Disadvantages:
• Duplication of activities.
• Difficult to coordinate across departments.
3. Customer Departmentalisation
Organises work
and workers into
separate units
responsible for
particular kinds of
customers.
4. Geographic Departmentalization
Organizes work
and workers into
separate units
responsible for
doing business
in particular
geographical
areas.
Why work teams?
Team-based
structure: where
the organization
creates a series of
teams to
accomplish
specific tasks and
coordinate major
departments
Modern forms of
org structures
Team-Based Structure
https://www.youtube.com/watch?v=FzBbYhO0
X0Q
• PAUSE
Porter’s Generic Strategies
Porter proposed two generic competitive or business-
level strategies that organisations can adopt:
1 Differentiation: where organisation attempts to
develop innovative products unique to the market.
Strategic goals include differentiation, innovation and
flexibility.
2 Cost leadership: where organisation strives for
internal efficiency. Strategic goals include cost leadership,
efficiency and stability.
The strategies of differentiation or cost leadership
require different structural approaches so managers try
to pick strategies and structures that are compatible.
Examples of Companies Practicing
Cost Leadership Strategy
IKEA has successfully combined low cost with good quality, and
its “democratic designs” that balance function, quality, design,
and price giving IKEA a competitive edge.
Payless ShoeSource is a discount retailer that sells inexpensive
shoes for men, women, and children. Their advertising slogans
such as”Why pay more when you can Payless?” and”You could
pay more, but why?” consistently preach a low-price message.
Supercuts makes clear their longstanding cost leadership strategy
by noting, “A Supercut is a haircut that has kept people looking
their best, while keeping money in their pockets, since 1975.”
7-Eleven stores offers $1.00 coffee or iced coffee, sometimes on
specific weekdays. Adding a chocolate bar or lottery ticket would
increase the total bill, and make up for any loss on coffee price
Source: https://opentextbc.ca/strategicmanagement/chapter/cost-
leadership/
When to use
tall mechanistic structure
Influenced by the strategy & the environment it operates in
When strategy is stability oriented such as cost leadership –
choice of org design should be based on the premise that little
significant change will be occurring in the external environment
Hence plans can be set up and operations programmed to be
routinely implemented.
To best support this strategic approach, org should be
structured to operate in a well defined and predictable way so
most likely to adopt a functional approach.
With more centralised authority, many rules and procedures, a
precise division of labour, narrow spans of control and formal
means of coordination
Eg McDonalds and KFC
When to use an
organic flat structure
When strategy is growth oriented such as
differentiation and likely to change frequently, the
situation is more complex, fluid and uncertain.
Operations and plans are likely to have short life spans
and require frequent and even continuous
modification over time.
So most suitable to use a structure that allows for
internal flexibility and freedom to create new ways of
doing things – most characteristic of empowerment
found in adaptive orgs using more organic design
alternatives – such as team and network structures.
Especially applicable to orgs based on new digital or
information technology
Relationship between structure and strategy
Differentiation:
Growth oriented
Cost leadership:
Stability oriented
Strategy also integrates the firm with its external environment. This means that the
structure of the firm must align with external conditions. The problem this presents is
that the environment constantly changes and the firm has little control over the
changes. Strategy and structure must be flexible to adapt to changes in the
environment.
Organisational Design:
Fitting structure to the environment
Environmental Certainty
- Composed of relatively stable and predictable
elements
- Therefore able to succeed with relatively few
changes in the goods or services produced or in the
manner of production over time.
Mechanistic design
Fit between Strategy, Environment and Structure
Source: Campling et al., 2008, Figure 10.3
E.g. Differentiation
e.g. Cost Leadership
Organisational Design
Contingency thinking
1. Does the design fit well with the major problems and
opportunities of the external environment?
2. Does the design support implementation of strategies and
the accomplishment of key operating objectives?
3. Does the design support core technologies and allow them
to be used to best advantage?
4. Can the design handle changes in organisational size and
different stages in the organisational life cycle?
5. Does the design support and empower workers and allow
their talents to be used to best advantage?
• PAUSE
Organisational Change
Chap 7:119-125
Change
E.g. from internal
environment such as
employees that resist
change due to self-
interest & distrust
Faulty action:, managers assume that if they just run a ‘tighter ship’,
company performance will return to previous levels.
Dissolution : dissolve
: getting the
people affected
by change to
believe that
change is
needed
: getting
workers &
managers to
change their
behavior &
work practices
: supporting &
reinforcing new
changes for
them to ‘stick’
Managing resistance to change: Kurt Lewin
Change
Unfreezing Refreezing
intervention
Causes:
Eg: Fear of the unknown, disrupted habits, loss of control,
poor timing, work overload
– Fear of the unknown – not understanding what is
happening or what comes next
– Disrupted habits – feeling upset when old ways of doing
things cannot be followed
– Loss of control – feeling that things are being done to
you rather than by or with you
– Poor timing – feeling overwhelmed by the situation or
that things are moving too fast
– Work overload – not having the physical or psychic
energy to commit to the change
Topic 6 Managing
Resistance to change
Managing resistance to change
Participation
Negotiation