Strategic Management: Formulation and Implementation

Major Areas Of Organizational Change

External or internal forces translate into a perceived need for change within the organization. Managers sense a need for change when there is a performance gap a disparity between existing and desired performance levels.

The performance gap may occur because current procedures are not up to standard or because a new idea or technology could improve current performance.

Although change can be brought to virtually any part of an organization, significant changes or innovation usually involve making alterations in changing strategy and in one or more of these key organizational components, technology, structure, human resources, and culture.

Changing Strategy

A change in organizational strategy is a planned attempt to alter the organization's alignment with its environment. Moreover, organizations evolve through a lifecycle, with each evolving stage raising change challenges. The strategy an organization adopts will be in influenced by the firm's product life cycle (see section "The Stages of Changes").

Change might be focused on any area of strategy. For example, an organization might change its strategy goals. It may revise a particular business strategy for example, by dropping a differentiation strategy and adopting cost of leadership.

Other changes in organizational strategy would be enter into a joint venture, partnership or to move into international markets. Finally, an altered functional strategy might reflect changes in debt or changes in spending on research and development.