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Internal and External Drivers of Change

There are two main drivers of change for organizations: external and internal. External drivers include globalization, institutional constraints, technological innovations, hypercompetition, and advancement in education. Internal drivers include the desire to improve operations, products/services, and processes. A case study of a golf club manufacturer highlighted internal drivers like innovation, management changes, technology upgrades, and a culture of continuous improvement. Changes must be carefully planned through consultation and communication to be successful.

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391 views4 pages

Internal and External Drivers of Change

There are two main drivers of change for organizations: external and internal. External drivers include globalization, institutional constraints, technological innovations, hypercompetition, and advancement in education. Internal drivers include the desire to improve operations, products/services, and processes. A case study of a golf club manufacturer highlighted internal drivers like innovation, management changes, technology upgrades, and a culture of continuous improvement. Changes must be carefully planned through consultation and communication to be successful.

Uploaded by

ThuraMinSwe
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We take content rights seriously. If you suspect this is your content, claim it here.
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Internal and External Drivers of Change

John Olaghere
Overview:
A cursory look at organizations around the globe it is easy to discern change as
perhaps the single most common feature among them. Changes come in different
forms and smart leaders of organizations continually seek ways to improve
strategies and transform their operations to further enhance growth. Two main
drivers of change, external or outside causes, and internal or causes from within
have identified. The last few decades have witnessed more changes in
organizations than any other period in history. Changes may take the form of
reengineering business processes, quality restructuring programmes, outsourcing,
delayering and downsizing, mergers and acquisitions, change in strategy, and of
corporate culture. As constant as change is, however, it is not an easy process and
many organizations (estimated between 70% and 90 %) end-up on the losing side
after implementing changes.

Roberts pointed out that structures and operations of organizations need to be


aligned reflecting the reality of the business environment. Roberts further
emphasized the need for holistic changes to be carried out so to avoid
unanticipated problems as “…a change in strategy can easily affect industry and
bring a reaction that leads to the need for further changes in strategy and
organization” (Roberts, J. 2007, p. 282). Equally a change in organization can
necessitate design changes in other areas.

In a 2007 research involving 28 organizations, J.S. Oakland and S.J. Tanner found
that “successful change focuses on both strategic and operational issues”. The
research identified external drivers to be customer requirement, demand from other
stakeholders, governments’ regulatory demands, market competition, and
shareholders. Internal drivers on the other hand were found to be desire to improve
operational efficiency, need to improve product and services, and process
improvement. For Child globalization, institutional constraints, technological
innovations, advancement in education, hypercompetition, changes in demography,
and growth of social movements are the external drivers.

External Drivers of Change:


Globalization leads to new markets and demands dynamism among organizations.
The opening-up of mainland China to the outside world, for instance, and its
subsequent membership on the World Trade Organization created a new
environment and brought about dramatic changes for businesses around the world.
Companies, both large and small, had to adjust their boundaries and realign
themselves to take advantage of the deregulation, the vast market, the cheap but
efficient Chinese labour, and mass produced goods.

Institutional Constraints include laws, regulations and tariffs by international


organizations, governments and pressure from nongovernmental organizations. An
example is the issue of global warming and climate change that has led to limits on
carbon emission and adoption of measures to ensure proper industrial waste
disposal. The concept of “green GDP” is catching on across the globe.

Technological Innovations have massively impacted organizations’ structures and


operations. This era is constantly referred to as the “information age” due to the
easy availability of information that was hitherto unassailable. Communication
technology has also witnessed tremendous transformation as organizations can be
in constant touch with branches, partners and customers anywhere in the world
without huge costs. This has also affected consumers’ choices as they are now
better equipped to make informed decisions.

Hypercompetition among different organizations has kept management on their


toes observing and reacting to every move by rivals. Recent years have seen large
scale efforts at innovation, outsourcing, mergers and acquisition amongst others
and have become driving forces of structural strategic changes in organizations in a
bid to remain viable.

Advancement in education has brought about change in large proportion. The high
rate of young qualified engineers and IT professionals in India and China has made
them favourite destinations of offshore outsourcing. These university educated
employees can perform as well as their western counterparts but for about one-
tenth of the cost in salaries and other benefits.

Internal Drivers of Change:


A case study (Thorburn, L. and Langdale, J. 2003) on Super Alloy Technologies,
an Australia manufacturer and exporter of golf clubs highlights some of internal
drivers.

Innovation led Super Alloy Technologies to produce variations in its designs and a
decision to stamp the brands of customers on the club head rather than its own.
Super Alloy Tech has implemented numerous changes to its management to
enhance its designs including acquiring an integrated mainframe computer system
for effective information, record & inventory keeping, reporting and budgeting. In
order to increase capacity of production and manufacture more high-tech
components they installed a new vacuum furnace.

Culture of Super Alloy Technologies does not believe in a one-off change, rather it
focuses on continuous changes aimed at high quality products delivery at best
possible prices.

The need to improve product and services has also induced change in Super Alloy
Technologies. The company hoped to cut cost while at the same time improve
quality and better customer service.

Conclusion:
Change is inevitable but must be approached carefully through consultation and
regular communication to become successful while external support should be
sought when necessary. “Change is the law of life. And those who look only to the
past or present are certain to miss the future” (John F Kennedy 1963).

References:
Child, J. (2005) Organization: contemporary principles and practice. Malden, MA:
Blackwell Publishing

Oakland, J. and Tanner, S (2007) A new framework for managing change. (Online)
Available from:
http://www.emeraldinsight.com/Insight/ViewContentServlet?Filename=Published/
EmeraldFullTextArticle/Articles/1060190604.html Assessed: 20, June, 2009
Roberts J (2004) The Modern Firm. Oxford: University Press
Thorburn, L. and Langdale, J. (2003) Embracing Change, Case Studies on how
Australian Firms use Incremental Innovation to Support Growth (Online)
Available from: http://www.dest.gov.au/NR/rdonlyres/A364E094-D061-431C-
AFF4-88723DE0532F/1365/embracing_change.pdf Assessed: 20 the June 2009

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