Global Economics Effects on Organizational Change

Introduction

The economic sphere of the global economy has changed significantly over the last two decades. These changes have affected how organizations move up and down in the national system. Globalization has its historic background on the development of new technology and deregulation of capital markets (Apfelthaler, Shane & Hruby, 2011, p. 34). The development of new technology has compelled companies to change the way they compete in the international market. Technology is the key driver of change in the new global economy. Large Corporations are using the new technology to reduce costs and improve organizations performance.

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However, the topic of global economics is inherently interdisciplinary because it affects the ability of companies to make profits today and in future. However, much of the focus today has been fueled by the different perception of what is happening in the outside world. Laurens, Lebas, Schoen and Larédo (2015) argued that globalization economics is different from internationalization in that it is qualitatively distinct as it involves the functional integration of internally dispersed activity in the organization (p. 23). Internationalization means the extension of economic activity outside the organization. Today, the change in the global economics has compelled companies to change the way they are managed and governed to succeed. These changes can have either a positive or a negative impact on the organization depending on the perceived result.

Specifically, these changes can be beneficial to the organization because they can help managers to think about what they have overlooked in the past. Changes resulting from global economics can lead to increased performance, increased profit, and high employee morale. The ways managers respond to these changes determine the survival of the organization. In this paper, we shall apply Weisberg Six Box Organizational Model to analyze the impact of global economics on organizational change. The chief argument in this paper is that technological advancement is an increasingly vital constituent of globalization that has compelled companies to change their business structure. Globalization results in increased competition. This competition can be associated with the target market, quick response, technological advancements, product and service cost and quick production. When a firm produces at less cost, it increases competitiveness in the marketplace.

Causes of change

The changes in global economics have led to increased competition. Demir (2015) noted that competition increases when companies reduce production costs and sell their products at lower prices than those of competitor (p.16). This is because low production cost is a source of competitive advantage, which can help a company to increase its market share and profitability. Today, companies want to acquire goods and services quickly and in a more efficient manner by introducing new products in the market. This has resulted in a large number of substitute goods and services in the market. Moreover, customers expect organizations to offer high-quality products that meet their expectations. Organizations are expected to meet all these expectations without increasing prices, which is likely to increase competition.

Competition arises due many players in the same industry who are trying to sell similar products in the same geographical area. Moreover, globalization has increased competition because multinational companies have expanded their operations to the emerging markets. The development of new technology has compelled companies to change, which also determines the way organizations compete in the international market. Technology is the key driver of change in the new global economy. Since multinational companies have huge resources and experience, they can be able to produce products at low cost. Moreover, organizations competing in the same marketplace want to remain relevant by introducing new products in the same market. Thus, they have compelled firms to change the way they operate concerning employee management, product design and pricing strategies.

Needs that caused the change

To compete in the current global markets, certain steps had to be taken to increase the productivity of organizations. Over the last two decades, technology advancement has set a new path for organizations. Firms had to adapt to the new changes to meet the current generation’s needs. Globalization has led to increased competition related to the target market. Companies had to shift to meet the global standardization for market prices. However, it has helped companies to increase their market share and long-term sustainability. Big firms use modern technology to reduce production costs in order to remain competitive in the market. This has pressured other firms in the industry to change the way the manage workers, production costs, and technology.

Companies are now changing the way there approach production processes to reduce operation and production costs. When a company can be able to produce at low cost, it can be able to sell its products at lower prices than their competitors while still earning adequate returns. Local firms had to gain extra knowledge to change accordingly in order to be competitive (Saki, Shakiba & Savari, 2013, p. 11). Each firm aims to win the trust of its customers thus they are expected to meet every demand that the customers want. Since major players in the industry produce high-quality products at low cost, customers have been pressuring local companies to respond to their needs to match those of multinational corporations without increasing prices. Therefore, competition in the local and international market has compelled companies to change.

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Technological advancement has been a major contributor to the need for change in organizations to increased production and efficiency. Firms are expected to keep up with the trend. For instance, in the early twentieth century, it was more relevant to post an advertisement in the dailies than on the web. Customers were more likely to read the dailies compared to the web. However, today, technological advancement has shifted the entire perspective. Companies are more to reach more audience on the internet that is fast and cost effective. The way customers purchase different products and services have changed significantly. Firms are seeking better marketing solutions and strategies to increases sales. Since organizations operating in the same geographic area want to increase their relevance in the market, they have been compelled to change the way they compete and produce their products.

Why are the changes necessary?

Change is required to increase workers morale, competitiveness and improve organizational efficiency. Change is essential to ensure not only performance has improved, but also to improve competitiveness in the market. With many players operating in a common geographical region, each firm has a responsibility to ensure they have retained and increase their market share. McGuire and Silvia (2010) highlighted that organizations are expected to maintain a smart strategy to increase assets utilization that can potentially increase sales (p.57). Nowadays, customers expect high-quality products and at an affordable price. Multinational firms have been able to offer high quality produces because they have the right technology to satisfy this need. Thus, local companies have to strategize by improvising technology to achieve competitive advantage. Though it is expensive to change, it is vital to the future competitiveness of the enterprise. Change is necessary because the firm must remain competitive and expand shareholders wealth. Each company aims to win the trust of its customer thus they are expected to meet the demand of all customers in the market.

Change is necessary to improve employee attitude and morale. The firm has to adapt to certain changes in the way they manage their staff to create a healthy working environment. O’leary, Mortensen and Woolley (2011) noted that organizations could be able to achieve competitive advantage when they have a well-motivated workforce (p. 469). Motivated workers are a source of competitive advantage. Moreover, they are likely to be productive and innovative, which can be a source of competitive advantage to the company.

It is the duty of managers to ensure they have motivated their workforce, which will help the organization to achieve its goals more easily and effectively. Therefore, it is imperative for the organization to have visionary leaders who can be to maintain a motivated workforce. Thus, change is needed in all aspects of the organization in order to achieve set objective and increase market share. Moreover, change ensures that organizations can be able to meet customer needs, which is a requirement for the achievement of customer satisfaction. However, these changes must be strategic in a way that allows the organization to maximize its assets to increase production and sales.

How changes should be made in the organization

Change is imperative for the organization in order to achieve the intended objectives. In most cases, change seems daunting to the organization. However, it can be achieved effectively if managers can be able to use the right tools to analyze and manage change. They are different models that can be used to analyze change. However, we shall apply Weisbord’s six-box model. This model focuses on changes in the organizational strategy; rewards, leadership, structure and internal relationship. It is centered in the area of dissatisfaction in the organization with much focus on external and internal producers of dissatisfaction.

How changes should be made in the organization

Organizations can be able to achieve effective change by finding the cause of dissatisfaction in the six elements of the model. Specifically, the internal players in the organization (managers and employees) are the key decision makers who can be able to identify and eliminate dissatisfaction. According to Weisbord’s six-box model, managers can implement change by establishing a clear vision/purpose, which must be aligned with the organizational goals. Secondly, managers have to ensure that the organizational structure fit with the internal structure of the company in order to align them with the mission and vision of the organization. Managers should then change the reward system in the organization to ensure it is deemed fair by workers who are the major players in achieving organizational goals. Helpful mechanisms refer to processes that help workers to do their work. Managers can only be able to implement change when they determine if these mechanisms will help or hinder the accomplishment of organizational goals. Finally, managers must be able to establish how individuals and departments affect the performance of the company (Majeed, 2013, p. 52).

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Benefits of the change to the organization

The change enables an organization to increase its customer base and maximize profit. When a company initiates change, it can be able to enjoy high-motivated workforce, which means high production. Moreover, change ensures that workers have a convenient and healthy working environment. With the use of technology in production processes, companies can be able to increase production as they increase workers efficiency. When a corporation implements change by using modern technology, it can be able to reduce operation costs because few workers will be required to operate the machines. In return, the company will be able to offer better pay to the few skilled staff members who can meet the objective of the organization. With the help of technology, for instance, office messengers are no longer needed. Team players can also be able to exchange ideas with the use of emails which is efficient, cheaper, and quick. In addition, customers benefit from the change in the sense that changes result in increased efficiency, which reduces production cost, which is reflected in reduced prices. Besides, customers can enjoy easy access to services at their convenience (Hampton-Farmer, 2015, p. 134).

Change is imperative to allow workers to learn new skills. When an organization initiates change, workers get a chance to explore new opportunities and learn new skills, which will enable them to more creative and productive in the workplace. However, implementing these changes requires organizations to prepare workers through training.

Lesson Learned from change management

First, organizations learn that change is inevitable in order to increase productivity and efficiency of its workforce. Change management can enable a company to gain competitive advantage due to improved performance. When managers have the right tools and skills to evaluate and implement change, an organization can be able to reap the benefits of improved performance and productivity. Secondly, organizations learn that having the right technology in place is a key driver that enables them to achieve their objectives. Over the last two decades, technology advancement has set a new path for organizations. Firms had to adapt to the new changes in the market in order to meet the current generation’s needs. In addition, globalization has led to increased competition, which has forced some companies to lose their market share while other gained significantly. This has enabled me to understand that, managers play a critical role in change management, which has a direct impact on the organizational success and future sustainability. Finally, organizations learn that it is important to implement change in order to improve performance, which increases productivity and brand reputation of the company in the long run.

Closing remarks

Three things learned from managing change that I would use in my personal life

I have learned three things in change management that will help me in major decision making in my workplace. First, it is imperative for the organization and especially workers to be ready for a change. In order to help workers get ready for change, I have learned that involving workers through proper channels of communication can contribute significantly to overcome resistance. Second, top managers should prepare middle-level manager and supervisors to implement change. Finally, managers should establish an open communication channel for everyone in the organization including junior employees for change to be effective.

The new knowledge I have gained will help me to evaluate and monitor change effectively. For instance, I will be able to communicate with all employees to ensure they understand why the organization should implement change. This will motivate them to support new changes in the organization thus reducing resistance.

Personal reflection

During my HR career, I realized that the new millennial employees are very different from traditional workers. The way they approach issues make it complicated to deal with especially if you do not have an open mind. For instance, as a HR manager, I noted that the millennial workers want managers to listen to them. This generation is brought up in an era where they have significant freedom of expression. This generation will change the bureaucratic system of management to flat organizational structure because they have ideas and opinions, and they want managers to respect them. Moreover, this generation is up for challenges and change. They do not maintain their status quo. I was surprised to see how they want new challenges and in most cases, what happens every day is their mantra. Thus, managers must ensure they do not trivialize or ignore their contributions in the workplace, which will change how managers perceive employees and information flow within the organization.

References

Apfelthaler, G., Shane, M. J., & Hruby, J. (2011). It’s a Jungle Out There. On Managerial Cognition, Change, and Learning During Internationalization. International Journal Of Global Management Studies, 3(2), 22-54.

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Demir, S. (2015). Is end of a dream? reassessing the nato enlargement policy toward the black sea and caucasus regions. Journal Of Black Sea Studies, 12(46), 1-22.

Hampton-Farmer, C. (2015). Cultural norms that facilitate organizational change in a tire mold facility. Journal Of Organizational Culture, Communications & Conflict, 19(1), 131-145.

Laurens, P., Lebas, C., Schoen, A., & Larédo, P. (2015). Internationalisation of European MNCs R&D: “deglobalisation” and evolution of the locational strategies. Management International / International Management / Gestión Internacional, 19(4), 18-33.

Majeed, A. (2013). Application of Business Process Through Talent Management: An Empirical Study. Journal Of Marketing & Management, 4(2), 46-68.

McGuire, M., & Silvia, C. (2010). The Effect of Problem Severity, Managerial and Organizational Capacity, and Agency Structure on Intergovernmental Collaboration: Evidence from Local Emergency Management. Public Administration Review, 70(2), 279-288.

O’leary, M. B., Mortensen, M., & Woolley, A. W. (2011). Multiple Team Membership: A Theoretical Model of its Effects on Productivity and Learning for Individuals and Teams. Academy Of Management Review, 36(3), 461-478.

Saki, S., Shakiba, H., & Savari, M. (2013). Study of the Relationship between the Organizational Learning and Organizational Innovation at University of Tehran. E Journal Of Organizational Learning & Leadership, 11(1), 1-18.

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