Organizational Changes

Companies are required to modify productive processes or strategic goals and aims in response to an external influence, change in consumer behavior or a shift in the industry landscape. This necessitates a reorientation of capital, resources, employees and corporate systems. Below are some of the common causes of organizational change:

Exit Strategy at The End of the product Life Cycle: As the market for a companies product reaches maturity, market growth and profits begin to diminish. Despite the fact that cost cutting occurs and marketing budgets are reduced, when the opportunity cost of deploying capital and resources to another more favorable opportunity presents, companies either sell off existing operations or cease production altogether. This can be in response to a new superior product release, a change in consumer purchasing habits or the introduction of a new technology. Irrespective of the cause, capital and labor are redeployed to new more promising business activities. The exit strategy is a common cause of organizational change.

Change in Government: Employees that work for government departments can find existing initiatives get discontinued when a change in government takes place. The subsequent refocus of priorities that takes place as a result of the new governments mandate can create redundancies or a radical change in the way the department conducts its affairs.

Mergers and Acquisitions: When two competitors merge the existing business operations of both companies get centralized and streamlined. This can result in the merging of departments and processes, cost cutting and a redeployment of existing resources. Mergers and acquisitions are one of the most frequent causes of organizational change.

Strategic Refocus: When the company changes its business processes to adopt a new paradigm organizational change ensues. Consider the plight of a company that shifts its focus form a product centric to a customer centric platform. New manufacturing specifications, new marketing and a change in logistical operations create a change reaction for change throughout the organization.

Structural Change: When new administrative processes get introduced, organizational change results. Consider the ramifications of centralizing an archiving process using computer technology. Old redundant processes get replaced by new software and hardware and staff members are required to retrain to operate the new systems.

Process Oriented: When a company redefines its manufacturing operations by changing its manufacturing process to a JIT operation, infrastructure, warehousing and logistical operations are required to be redesigned and deployed. This structural shift in the way a product is created has a domino effect on organizational change.

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