Topic 6 – Change

Change has recently become a very important topic as companies have gone through countless restructurings in an attempt to respond to new competitive pressures in the business environment.

Change is the movement of a company away from its present state toward some desired future state to increase its competitive advantage.

One of the principal reasons that companies fail is their inability to change and adapt to a new competitive environment because of organizational inertia—a force that makes companies resist change. For example, the Icarus paradox suggests that companies continue to rely on the skills and capabilities that made them successful long after these capabilities cease to match the new competitive environment. Inertia also results from power struggles among managers and their vying for control over resources.

Forces that drive change:

The common denominator in today’s business environment is change. The areas in which pressures for change are most powerful are people, technology, information processing and communication, and competition.

A. People

Some population-related pressures for change include the increasing numbers of senior citizens and people born after 1960. The large number of senior citizens is affecting part-time employment practices, the marketing of everything from hamburgers to packaged tours to the Orient, and service areas such as health care, recreation, and finance.

B. Technology.

The rate of technological change is increasing. Advances in information technology mean that more information is generated within organizations and that it circulates more quickly. Consequently, employees are able to respond more quickly to problems, which enables the organization to respond promptly to demands from other organizations, customers, and competitors. New technological