Term Paper, 2011
46 Pages, Grade: Distinction
2. Definition of Strategic Change
3. Main causes of Strategic Change
4. Prescriptive approaches to managing strategic change
5. Emergent approaches to managing strategic change
6. Levels of Strategy:
7. Corporate Social Responsibility (CSR)
8. Shareholder and Stakeholder perspectives on corporate social responsibility
9. Implementation of CSR Strategies in organizations
10. Main issues within the context of strategic change and corporate social responsibility
11. Effects of strategic change on stakeholder that support long term sustainability
13. Appendix 1
14. Appendix 2
15. Appendix 3
16. Appendix 4
17. Appendix 5
It is argued by several scholars that Corporate Social Responsibility (CSR) is considered by corporations as strategic for the business because of its contribution to financial performance (Barnett, 2007; Orlitzkyetal., 2003) or to market value (Mackey et al, 2007). Recent studies find it wiser for the firm to act strategically with regard to CSR activities and suggest using the same frame work that guides their core business choices in order to make CSR a source of competitive advantage for the firm (Maxﬁeld, 2008). The stake holder model of strategic management, the inclusion of social demands as strategic issues, as well as suggestions of more general ways in which CSR Programmers can create strategic benefits for the Organization have been included in attempting to integrate the concepts of CSR and corporate strategy (Burke and Logsdon, 1996; Carroll et al, 1987;Galbreath, 2006).
In this essay, the author will analyse and discuss the main issues which are needed to consider when managing strategic change in the context of CSR by using the example of different organizations. Moreover, the main issues will be explored and criticised within the context of strategic change and CSR. Furthermore, it will consider the effects of such strategic change on stakeholder, especially with regards to delivering ethical strategies that support long term sustainability.
Strategic change has been defined as impacting upon the way an organization does business (its business system) and on the way an organization has been configured (its organizational system) (De Wit and Meyer, 2004). Moreover, it appears that De Wit and Mayer see strategic change as affecting the way an organization does business, and an organization is configured. Furthermore, these authors claim that strategic change is possible through impacting the way of an organization is configured and doing business. According to Lynch (2009, p.564), “Strategic change is the proactive management of change in organization to achieve clearly identified strategic objectives.” Moreover, Proactive means that the company takes the initiative to administer new strategies and their impact on people in an organization. Furthermore, Lynch believes that strategic change is the initiatives taken by the organization to achieve clearly identified strategic objectives. Moreover, this author prefers the initiatives taken by the organization in case of strategic change. In my view point, the claim of Lynch is more appropriate than another author. Because strategic change is not just an informal drift throughout time but a proactive search for new ways of working which everyone will be required to accept. Thus, strategic change includes the implementation of new strategies that involve substantial changes beyond the normal routines of the organization. Moreover, there are different types of strategic change, which are explained in Appendix 1.
It is important to understand the main causes of strategic change, in order to implement strategic change effectively. Tichy, Kanter, Stein and Jick identified the main causes of strategic change (Tichy, 1983, Kanter et al, 1992 in Lynch, 2006). Furthermore, Tichy identified four main triggers (Environment, Business relationship, Technology, People) for change. Moreover, Kanter, Stein and Jick identified three causes of strategic changes (Environment, life cycle differences, and political power changes inside the organization) and Environment is the same as in the Tichy classification. According to Tichy (1983), environment means shifts in the economy, competitive pressures, and legislative changes can all lead to demands for major strategic change. Moreover, Tichy (1983) sees business relationships such as new alliances, acquisitions, partnerships and other significant developments may require substantial changes in the organisation structure in order to take advantage of new synergies, value chain linkages or core competencies. Moreover, shifts in technology may have a considerable influence on the content of the work and the survival of the companies. Furthermore, new entrants to organizations can have different educational or cultural backgrounds or expectations which require change, especially when the leadership of the organization changes. On the other hand, according to kanter,stein, jick life cycle variations may also cause strategic changes “Changes in one division or part of an organization as it moves into phase of its life cycle that is different from another division may necessitate change”( Lyunc,2006, p. 568). Moreover, kanter, Stein and Jick identify political power changes inside the organization as a main cause of strategic change. They state that individuals, groups and other stakeholder can fight for power in order to make decisions or to gain benefits associated with the organization (Lynch, 2006).
In the viewpoint of the prescriptive approaches, manager needs to consider how to manage the change process in developing and implementing strategy. For example, in the Hewlett Packard case, the company clearly set out to manage its major organizational change in 2001. Furthermore, reassurances from the employees are confirmed by careful announcements and explanations. Moreover, it explained the reasons for a new organization structure by matching it more customer-focused. Furthermore, it promoted willing managers and ignored those who were against such change (Lynch, 2006).
In addition, three major forms for managing change are identified by the Kanter et al (Lynch, 2006). The first one is the changing identity of the organization. For example, when it is an environment change, the company needs to react to a shift in the political stance of a national government. Moreover, the coordination and transition issues as an organization through its life cycle are the second approach. For example, the decision to create a separate division for a product range that is growing increasingly will give rise to change issue that are well known, but need management (Lynch, 2006). Finally, controlling the political aspects or organizations is the last approach suggested by Kanter et al. Shift in power can happen, for example, the sudden departure of a chief executive (Lynch, 2006). In addition, the three categories of people involved in the change process are also identified. One category is change strategists, who are responsible for the detailed implementation. Second category is change implementers who are responsible for change management. Lastly, change recipients who receive the change programme with varying degrees of anxiety (Lynch, 2006).
In addition, Kurt Lewin’s model of change can serve as the foundation for developing the strategy for planned organizational change (Chung and Megginson, 1981). Furthermore, Lewin suggested three stages model. (Lynch, 2006).
illustration not visible in this excerpt
Source: Flat World Knowledge Website, 2011.
The first stage is the unfreezing, and this involves introducing measures that will enable employees to abandon their current practices or cultural norms in preparation for the change. In many organization, nothing has changed for many years, and unfreezing is necessary as a ‘shaking up’ phase. The second stage is changing which is a transition phase involves bringing about requisite change itself. The time period for this phase varies widely. Structural change can usually be bought relatively quickly. Moreover, changes in the internal systems sometimes take longer. The third stage is refreezing which is necessary to lock in the changes and prevent the organization from going back to its old ways (Campbell, Edgar, and Stonehouse, 2011).
It is assumed that prescriptive approaches of change are useful in situations where it is possible to move clearly from one state to another. In case of turbulent environment, these approaches may be inappropriate. Furthermore, this model relies on the imposition of change on the employees concerned. However, this model may be inappropriate in case of the situation where the cooperation of employees involved is needed, or the culture works on a cooperative style (Lynch, 2006).
Human cost can be high in terms of resistance to changes and the consequences that follow from this. Emergent approaches, therefore, deserve to be investigated. Moreover, Caldwell (2006) suggests that there was a need to reappraise planned change, due to far-reaching workplace transformations over the previous two decades. Furthermore, planned change was challenged in the early 1980s due to the increasingly competitive international climate. Moreover, companies were competing across national boundaries with far less stability in markets. Additionally, Burke (2008, p.14) an advocate of planned approaches to change, was realistic about the unanticipated consequences of plans: ‘We must plan change yet understand that things never turn out quite as we planned. It’s a paradox’.
In addition, there are two major emergent approaches: the learning theory and the Five Factors theory. Moreover, Senge et al (1990, in Lynch, 2006) developed the learning theory as an emergent approach, which is essential. Furthermore, the learning process emphasizes team learning, the sharing of views and visions for the future, the exploration of ingrained company habits and people skills as the most vital asset of the organization and system thinking. Moreover, it is evidenced that the learning theory can work well when the company has the time and resources to invest in these areas. However, learning would not be suitable where there was a sudden change in strategic direction (Lynch, 2006).
Moreover, Pettigrew and Whipp developed the five factors theory of strategic change. He conducted an in-depth empirical study of strategic change at four companies (Jaguar cars, Long publishing, Hill Samuel merchant bank and prudential life assurance) and found out that there were five interrelated factors in the successful management of strategic change (Pettigrew & Whipp, 1991, in Lynch, 2006) (e.g. see Appendix 2). First of all, it is the environmental assessment which means that the organisation should assess the competition and create strategy which emerges from this process. In case of HP (Hewlett-Packard reorganization) (e.g. see Appendix 3), drivers of the business were identified (customers). The second factor is leading change that means the type of leadership can only be assessed by reference to the particular circumstances of the organization. Furthermore, HP focuses on key factors for success: customer focus, more centralization, and new innovation. The third factor is linking strategic and operational change which means to have a specific strategy for the organization. HP has linked motivation with customer focus and back with front and staff. The fourth factor is Strategic human resource management which means human resources are assets and liabilities, and these resources represent knowledge, skills and attitudes of the organisation in total. Moreover, some people are better in managing people than others. For example, HP performs presentation to staff. The fifth factor is coherence in management change, which attempts to combine the above four into a consistence whole and reinforce it by a set of four contemporary support mechanisms (consistency, consonance, competitive advantage, feasibility). For example, the arrival of new chief executive in HP (Lynch, 2006). Therefore, emergent models of strategic change are of use for long-term; however, they may not be sufficient at the time when a sudden change hits the organization.
Strategy can be formulated in three different levels in an organization (e.g. see Appendix 5), and these three different levels are described below-
illustration not visible in this excerpt Source: Plunkett et al (2008) Management: Meeting and Exceeding Customer Expectations. 9th edition. Thomson-South Western.
Corporate level strategy:
Corporate level strategy is the top level of strategy formulated in an organization. Moreover, it sets the long-term direction and scope for the whole organization. Furthermore, If any business consisted of more than one business unit, corporate level strategy will be concerned with what that business should be, how resources will be allocated between them, and how relationships between the various business units and between the corporate centre and the business units should be managed. Moreover, organization often expresses their strategy in the form of a corporate mission or vision statement (Barnes, 2007). For example, the Co-operative Group has taken over the Somerfield on 2nd March 2009, and this was corporate level strategy for Co-operative Group. Moreover, Somerfield, a small to medium sized chained supermarkets operating in the United Kingdom, was taken over by Co-operative in a £1.57 billion deal, and it becomes the UK’s fifth largest food retailer. Furthermore, under this corporate level strategy Co-operative decided to the name of the Somerfield would be phased out and replaced by the Co-operative Food Brand in a rolling program of store conversions (BBC News Website, 2011). Since this decision by Co-operative sets long term direction and scope for the whole organization, therefore, it was a corporate level strategy.
Business level strategy:
Business level strategy is primarily concerned with how a particular business unit should compete within its industry, and what its strategic aims and objectives should be. Moreover, depending upon the organization’s corporate strategy and the relationship between the corporate centre and its business units, a business unit’s strategy may be constrained by a lack of resources or strategic limitations placed upon it by the centre. In a single business organization, business level strategy is synonymous with corporate level strategy (Barnes, 2007). In the complex twenty first century competitive landscape, successful use of business level strategy results only when the firm learns how to integrate the activities it performs in ways that create superior value for customers. For example, South West Airlines has integrated its activities is the foundation for the successful use of its cost leadership. Moreover, the tight integration of south west activities is a key source of the firm’s ability to at least historically operate more profitably than its competitors. Furthermore, individual tightly linked activities make it possible for the outcome of a strategic theme to be achieved. Additionally, South West tightly integrated activities make it difficult for competitors to imitate the firm’s cost leadership strategy (Hitt and Hoskisson, 2011).
Functional level strategy:
The bottom level of strategy is that of the individual function (operations, marketing, finance, etc). Moreover, these strategies are concerned with how each function contributes to the business strategy, what their strategic objectives should be, and how they should manage their resources in pursuit of those objectives (Barnes, 2007). For example, Proctor & Gamble’s research and development department, which is taking a new approach to stay competitive in the slow growing consumer product industry instead of developing new products in the lab and testing them with customers, researchers are spending hours with customers, watching them do laundry, clean the floor, or apply makeup, looking for nuisances that a new product might solve. Then, they go into the lab with a goal of addressing the concerns of real life customers (Daft, 2008).
Carroll defined Corporate Social Responsibility as “the social responsibility of business encompasses the economic, legal, ethical, and discretionary expectation that society has of organizations at a given point in time” (Carroll, 1979, in Mallin, 2007, p. 108). This definition can be extended as the business having a responsibility to produce goods that it sell at a profit, to abide by legal requirements, to do what is right and fair, and finally to do what might be desired of companies in terms of supporting the local community and making charitable donations. According to Carroll (2006), “it appears that the corporate social responsibility has a bright future, at its core, it addresses and captures the most important concerns of the public regarding business and society relationships” (Carroll,2006, in Mallin, 2007,p.108). Carbury (2002) suggested that “the broadest way of defining social responsibility is to say that the continued existence of companies is based on implied agreement between business and society and that the essence of contract between society and business is that companies shall not pursue their immediate profit objectives at the expense of the longer term interest of the community.” (Carbury,2002, in Mallin, 2007,p.108). For example, Johnson & Johnson was able to recoup its lost market share of Tylenol in only few months because of being socially responsible business. Moreover, its competitors captured the majority of the market of Pain reliever. Furthermore, J&J’s market share plunged from 35.3 percent of the pain reliever market to below 7 % percent. J&J decided to no longer manufacture any over the counter capsules, because it could not guarantee their safety from criminal contamination. The company decided to market only tablets and so-called caplets, which were coated and elongated tablets that are easy to swallow. Additionally, the president said, “People think of this company as extraordinarily trust-worthy and responsible, and we don’t want to do anything to damage that.” Thus, Tylenol regained its market again (Hartley, 1993).
illustration not visible in this excerpt
Source: Tench R., Yeomans L., (2006), “Exploring Public Relations”, Harlow: Prentice Hall
Carroll considered CSR as a multi-layered concept, which can be distinguished into four interrelated aspects- economic, legal, ethical, and philanthropic responsibilities. Moreover, he demonstrates these different responsibilities as consecutive layers within a pyramid in a way that ‘true’ social responsibility needs the meeting of all four levels consecutively (Crane & Matten, 2007). The responsibilities are described in the following:
1) Economic responsibility:
The economic responsibility is the first layer of CSR, which is the basis for all subsequent responsibilities, which rest on this solid basis. In this layer, the responsibilities of all businesses are to be a properly functioning economic unit and to stay in business. According to Carroll (1991), the satisfaction of economic responsibilities is required of all corporations.
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