Forces Of Organizational Change And Development Commerce Essay Example

the organization to align with its environment.

Many of the top strategic decisions have an impact on the organization's design. These decisions allow the organization to leverage its unique capabilities. According to Michael Porter, companies must differentiate and position themselves differently from their competitors in order to create and sustain a competitive advantage (Hellriegel, Slocum & Woodman, 9th edition).

Types of Strategy

At the corporate level, there are two main approaches or schools of thought that can help us achieve a strategic fit with the environment. Each approach has its advantages and has proven to be effective under specific circumstances.

Competence Building (Inside-out) Approach

This approach focuses on the process of identifying and building on core competences, on an ongoing basis.

The emphasis is on planning merchandise and services that utilize the organization's skills and offering them to the appropriate market. The approach to building competence begins by deeply understanding the internal characteristics of the organization and its members. Then, the appropriate product/market is sought out that aligns with the organization's core competences.

Industry placement (Outside in) Approach

This approach to industry placement involves analyzing the local market, which can reveal promising opportunities as well as threatening competitors. Unlike the first approach, this strategy begins with external analysis, selects a pre-made generic strategy, and aligns its internal system accordingly (Saint-Macary, J. ; A. B. Bazoge, strategic Thinking).

Application

Case Study-Competence Building attack

Pfizer, a prominent drug industry company, generated significant shareholder wealth of 35% per year from 1992 to 1997. The reason for its exceptional success and achievements in the pharmaceuticals sector was its focus on the competence building approach towards its traditional strengths in research and

sales. William Steere, Pfizer's CEO and a former salesperson who joined the company in 1959, dedicated himself to creating one of the best sales forces in the industry. He expanded Pfizer's US Sales force from 1500 to 3467 within seven years, primarily recruiting talented and highly skilled salespeople from other companies.

The Pfizer company utilizes advanced information systems and technology to monitor the prescription histories of doctors in order to enhance their sales force. These systems also enable the company's top management to track the performance of the sales team and link it to compensation. Furthermore, Pfizer is dedicated to strengthening its research capabilities, and has recruited numerous highly experienced scientists through attractive compensation packages and unparalleled research opportunities. By integrating efficient management processes with early input from marketing, the research team has successfully achieved optimal outcomes.

Pfizer is a prime example of how executives can recognize their company's strengths and use that understanding to develop superior strategies.

Case Study: Industry Positioning Strategy

Enron Energy, unlike other companies in the energy sector, has successfully implemented an industry positioning strategy. The organization is always looking for opportunities in the market and aims to change the game in the industry. Enron initially began as a US pipeline company. However, in the mid-1980s, when other natural gas companies were seeking regulatory protection, Enron took a different approach. Embracing deregulation, Enron was able to establish dominance in the booming gas-trading market.

Enron utilized a consistent approach in the deregulated electric-trading market during the early 90s. They later invested heavily in the retail electricity sector, focusing on infrastructure development and brand building. Enron also expanded its business operations in Europe, India, and Latin America.

During this time, Enron established gas markets outside of the United States through the construction of pipelines and power plants in various countries. Simultaneously, they entered the wholesale electric market, surpassing major electric utilities and creating a large and successful electric-trading business. In July 1998, Enron's leadership team identified an unmet demand for water and sewer systems in developing nations.

Enron took its first step towards success by acquiring Wessex Water PLC, a prominent British water and water treatment company. In a 1997 study of corporate reputations conducted by Fortune magazine, Enron was ranked number one for innovation among 431 companies. This achievement can be attributed to the organization's effective selection and implementation of strategic approaches (Claudio, Aspesi and Vardhan, 2000).

Decision

The experiences of Pfizer Pharmaceutical and Enron Energy in different industries demonstrate that both competency building and industrial positioning strategies can yield exceptional results.

From the two examples provided, it can be concluded that implementing a scheme that aligns with the organization's strengths produces better results compared to one that may be more elegant in theory but does not reflect the organization's strengths.

Non-Strategic Forces

The literature on management often focuses on the perspective of organizations. It suggests that organizations are influenced by their environments based on how managers or leaders develop strategies, make decisions, and implement them (article-Organization and Environment: Adaptation or Choice). However, change is not always planned or desired. Ongoing internal and external forces can induce organizational change regardless of the leaders' or managers' strategies and intentions, and regardless of the actions taken by individual organizations.

There are three sets of forces that create change within and around organizations. The first set is the relationship between organizations

and their environments, which is viewed through a population ecology perspective. The second set is the growth of organizations throughout their life cycle. The third set relates to political dynamics and the constant struggle for power.

All three occur in a sense outside of strategic purpose or official organisational end. They pose unintended, unofficial, unwanted or belowground force per unit areas on organisations to alter signifier or way. In this paper I am traveling to discourse the first bunchs of forces to alter the organisation. ( Kanter, Stein and Jick, 1992 )

Population Ecology View of Organization

Contrary to adaptation position, population ecologists focus on the kineticss of alteration at the degree of whole population of the organisation.

They maintain that the type of environmental change is capable of exerting pressures that can favor or eliminate entire groups of organizations. These pressures stem from both the organization's internal structural cohesion and external limitations imposed by the environment. They can hinder organizations from adapting to their surroundings. The greater the pressures, the less flexible an organization is in adapting and the more likely it is for environmental selection to prevail.

These inertial force per unit areas include specialization of production works and forces; established thoughts and mentalities of top directors; unequal information; the trouble of reconstituting engineering and forces in nonionized works; the force of tradition; barriers to entry created by legal, financial, and other circumstances; and many other factors that make it impossible for organizations to engage in timely and efficient alterations. This position of organizational alteration emphasizes the importance of environmental competition and resource scarcity. These are the two forces that truly select or eliminate specific types of organizations.

As a result, populations of organizations can survive or fail as a result of natural evolutionary processes, regardless of the actions taken by individual organization.

(Article-Organization and Environment: Adaptation or Selection, Morgan 2nd edition)

Decision

The population ecology perspective is criticized for underestimating the importance of strategic decision-making for an organization. The significance of effective strategic decision-making and management skills is downplayed, which is not entirely accurate in the long run. Adaptation theorists argue that strategic decisions can effectively shape the environment by countering inertial pressures. For example, through collaborative actions with potential competitors, firms in other industries, governments, unions, etc., organizations can even reshape or eliminate many potential threats. They can be proactive instead of reactive in addressing these threats (Morgan).

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Organizational Growth and Development

A theory of organizational development, developed by Larry E. Greiner, is useful in managing the challenges associated with organizational growth and in creating a proactive approach to address such situations. It can be argued that growing organizations go through five relatively stable periods of development, each of which is followed by a period of crisis and revolution. Each period of evolution is characterized by the dominant management style used to achieve growth, while each period of revolution is characterized by the dominant management problem that needs to be solved before further growth can occur.

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The initial stage of organizational growth is known as creativity. This stage is controlled by the founders of the organization, with a focus on developing both a product and a market. These founders typically have technical or entrepreneurial backgrounds and disregard management activities. They take on multiple roles and make decisions

themselves.

The organisational structure is straightforward and communication between employees is frequent and informal. However, as the organization expands, there are management tasks that require more formal communication. As a result, the founders of the organization find themselves overwhelmed with unwanted management responsibilities. They attempt to implement the same strategy and control methods as before in order to achieve the same results but are unsuccessful.

The intensity of conflicts among frustrated leaders escalates, leading to a crisis of leadership, known as the first revolution of phase-1. It becomes clear that an effective leader with the required knowledge and skills in implementing new business strategies is required. Companies that successfully navigate this stage by appointing a competent business director usually progress to the Directive Leadership stage.

During this phase, the responsibility for establishing direction lies mostly with the new director and cardinal staff. Lower-level supervisors are treated more as functional specialists and less as independent decision-making managers. The organizational structure is centralized, communication becomes more formal, and accounting systems for inventory and purchasing are introduced. Functional department and job assignments become more specialized at this stage.
However, although the directing approach is effective for small or average organizations, it becomes inappropriate for larger, more diverse, and complex organizations. As a result, a crisis develops as demands for greater autonomy from lower-level managers begin to emerge, signaling the onset of the second revolution.

The organizations that have successfully implemented the top-down approach in the directing stage are reluctant to relinquish their authority and empower lower-level directors. On the other hand, organizations that have overcome this crisis have chosen to delegate power to lower-level directors and adopt a bottom-up approach. As an organization

reaches the growth phase of delegation, it typically transitions to a decentralized organizational structure, granting line directors with greater responsibility.

The frequency of direction, bids, and communications from top executives decreases as they rely on periodic reports from functional directors to manage the company. However, the top directors eventually realize they are losing control over a highly diversified field operation, leading to the emergence of a crisis. Consequently, in Phase 3, the top management initiates a revolution to regain control over the entire company. Some top directions attempt to centralize management again, but this proves unsuccessful due to the extensive range of operations.

During this stage, companies that are at the forefront have found a new solution to using specific coordination techniques. Decentralized units are merged into merchandise groups, which are responsible for properly using investments distributed by top management and achieving returns. The structure remains decentralized, but certain functions such as data processing are centralized. Line directors still have decision-making power for daily operations, but they must provide careful justification to top management for their actions. However, most coordination systems eventually become obsolete and result in the crises of red tape in the subsequent radical period.

The crisis at hand has grown to an overwhelming size and complexity that cannot be effectively dealt with using rigid plans and systems. In order to overcome the red tape crisis, the organization must transition to the next stage of evolution - the collaboration stage. Unlike the coordination stage, which relied on formal systems and procedures, the collaboration stage highlights the importance of spontaneity in management action through teams and skillful management of interpersonal conflicts. Social control and self-discipline replace formal

control in this stage.

This approach to management focuses on flexibility and behavior. Problem-solving is done through teamwork, using a matrix structure that assigns teams to specific tasks. Teams are created across departments for collaborative work. Greiner is uncertain about the next revolution, but he expects it to concentrate on the psychological well-being of employees, who may become emotionally and physically drained by the intensity of teamwork and the pressure to come up with innovative solutions.

( Article-Organizational growing and development )

Case Study

Company overview

ENAR Petrotech Services is a leading Technology and Consultancy company, located in Karachi -Pakistan, providing services of Design, Engineering, Procurement Assistance, Planning/Development, Inspection, Site Supervision and Project Management to the Projects in the Petroleum Refining, Gas Processing, Cross Country Pipelines, Chemical, Fertilizer and other sectors of the Process Industry. The company has recently completed its 30 ( 30 ) years of services. It started its business as a design unit of National Refinery Limited, the largest refining complex of the country till1990. After a few years it was separated from NRL and was made a sister company of NRL with two other companies PRD and Petroman.

The four organizations had to report to their parent company, PERAC. These organizations performed different functions and operated as independent entities. Only important decisions were made at the PERAC level, otherwise the four organizations had autonomy in making their own company decisions. Initially, ENAR offered advisory services to government organizations and was restricted to certain specific advisory and engineering services such as designing, detailing, and construction supervision.

The organization typically depended on small and uncomplicated tasks due to two reasons. Firstly, the new organization lacked the capacity to acquire

and accomplish large and intricate projects. Secondly, it was previously believed that only foreign reputable companies were capable of handling such technically and complex tasks involved in the development and construction of large oil projects. Consequently, during the 1970s and 1980s, there was not much appeal for local advisory and technology companies, especially in the oil and energy sector.

Infact, the main reason for establishing ENAR as a design unit of NRL was to reduce costs. Previously, the refinery had to pay foreign advisors and interior decorators even for minor alterations in the work.

Strategy Execution

In the late 1970s, Dr. Shahid was appointed as the new CEO of the organization. In his first time at ENAR, he began explaining and implementing the strategy. Initially, he adopted a low-cost approach, aiming to capture a significant market share of simple and less technical projects in various government organizations within the oil sector.

Meanwhile, he also planted the seeds for his future attack by enhancing the capabilities and expertise of the organization. His primary focus was on the supervision of design, engineering, and construction activities, which formed the core functionality of the organization. To achieve this, he invested in basic technology and drafting software, replacing manual drawing with computer-based outlining. Additionally, he provided training for senior and talented draughtsmen to adapt to this new drawing method.

He also hired skilled and experienced engineers and draftsmen on good wages to strengthen their technical unit. The efforts by Dr. Shahid and subsequent CEOs yielded results within a few years, and the company secured significant contracts in the industry. The pivotal moment came with the construction of the Dhakni Gas processing Plant. ENAR successfully completed

this project at a low cost without compromising quality. The success of this intricate and advanced endeavor significantly enhanced the organization's reputation and positioned it as a leading consulting firm.

The organization continues to enhance and expand its internal capabilities. This is achieved through acquiring advanced technology, utilizing electronic networking and information systems, accessing the latest engineering codes and design patterns, as well as utilizing proficient books and technology magazines. As a result of this competency-building approach, ENAR has become one of the leading advisory companies in the country since the 90s. Moreover, the oil sector has experienced significant growth in the past decade, becoming one of the largest industries in the country.

Due to the high demand for energy in the state, both local and foreign crude oil companies have invested in this sector. Additionally, numerous advisory and technology companies have entered the market to take advantage of business opportunities in the energy sector. For the first time in the last 40 years, multinational oil companies in Pakistan are utilizing local consultants instead of foreign consultants for their oil and gas fields. This decision aims to reduce operational and project costs. In this growing environment, M/s ENAR has decided to change its strategy after successfully implementing the previous one in order to seize more opportunities and reap greater benefits. Mahmood Ali, the current CEO, along with other top management, has decided to diversify their business into other advisory and technology activities.

Initially, ENAR had a strong presence in Design, Detailing and Construction-supervision services, specifically in the government Petroleum Company and refineries. However, they decided to expand their offerings to include undertaking direction and planning activities, cross-country grapevine

designing, works safety design, procurement aid, etc. This expansion required additional investments, such as hiring new staff and purchasing software and design codes. Despite these initial costs, ENAR began seeing positive returns after a few years. Additionally, the company started undertaking projects for major multinational crude oil companies in various activities as a result of this new strategy.

Organizational Growth

As the Organization grows in size and age, it goes through various stages of development and crisis in order to maintain its ambitious state of affairs. For example, ENAR began with a small staff, mostly consisting of engineers and architects. Their main concern was how to make the organization technically fit in the environment and achieve economic stability. Even though the organization is a government organization, the CEOs or leaders of the organization were given almost complete authority, especially in the day-to-day operational matters. However, as the organization grew in size and age, more functional activities were needed, and effective top managers were required to manage these functional departments. To overcome this crisis, the CEO formed and hired functional sections, staff, and their directors.

Then the second stage of development commenced, with senior Engineers and section Head typically making determinations. During this stage, the squad leader or line director had no decision-making power or ability to participate in the preparation of project proposals, selection of suppliers, or finalizing the range of work. Only after the proposal was approved or the contract was signed would the top management assign the task to the squad leader or intermediate director to execute according to contract requirements.

Since the squad leader or applied scientist is directly involved in the undertaking, they needed some

amendment in the contract or alterations regarding the agenda or undertaking day of the month restraint. They knew that certain undertakings required more time as mentioned in the programming of the undertaking, but they were unable to make any changes because their top management had already approved the agenda. Consequently, as the organization grew and expanded, these challenges faced by middle managers or applied scientists turned into an internal crisis. However, luckily, the company has promptly taken steps to address this crisis.

Some power has been delegated to middle directors or applied scientists. The squad leader or the important squad member has the authority to comment on the contract or even change or modify it or the scope of work, after informing the top directors and client. The squad leader also participates in client meetings and provides feedback. One of the main benefits of this decentralized structure is that the quality of work improves because direct interaction with the client helps to better understand their exact requirements.

The drawback of this evolutionary stage, according to the top direction position, is that they are losing control. Some clients even directly communicate with and discuss project affairs with the squad leader or Engineer instead of the top directors or Senior Engineers. As a result, some top directors are attempting to centralize the direction structure, which has led ENAR to face a crisis. Without a quick and effective response to move the organization to the next evolutionary stage, a conflict between top direction and middle management may arise, ultimately leading to decline despite having a good market and business.

Decision

The main reason for ENAR's success is undoubtedly following the right

strategy at the right time.

However, this is not the only reason. As the organization grows and goes through various stages, each stage ends with a management crisis. Effectively addressing and responding to these crises is essentially the key to success. If the organization only relies on its strategy and fails to respond and grow towards the next evolutionary stage, it will eventually die, regardless of how remarkable and exceptional its strategy may be.