What Causes Change in an Organization? 10 Factors Explored

Change is constant, and change is inevitable. Change happens in every organization, and every organization is required to adapt to that change to maintain its position in the market. There are various factors which cause a change in the organization.

Effective business management requires to have an awareness of the factors which can cause a change in the organization. Knowing the factors which cause change helps a manager to take decisions accordingly, which helps the organization grow and reduces the chances of loss.

In this article, you will learn about the different factors which cause changes in an organization.

Factors that cause a change in an organization

1) Change in governmental policies

No matter whether your organization is a public organization or a private organization government has control on it; however, the percentage of control varies.

Government policies decide the way an organization operates and what it can produce and not. For example, recently in India government has banned the use of certain types of plastic and because of this policy.

The operations of many organizations have changed as they are needed to make changes in the plastic. Similarly, there are various policies like employment hire policy, wages policy, and rights of employees and workers are controlled by the organization and the organizations are required to abide by these policies to be able to operate freely.

For example, in India, there is a policy that a minimum of 30% of the total employees of an organization should be women. This forces organizations to hire woman employees.

2) Change in market demand

Another important factor which causes a change in an organization is the changing demand of the market. Gone are the days when people are required to accustom themselves because of the products provided by the companies because, at that time, they did not have many options to choose from.

In modern times, there are several options available for one product in the market, and people have the freedom to choose from any of the product, and they have become less loyal for brands. They buy products from an organization which provides them a good quality of products at the lowest prices.

Because of this reason, companies are required to stay on their toes and change fast in order to facilitate the changing requirements of their customers.

For examples, in the era of the internet, people prefer to shop online rather than shopping from a physical store. Therefore, organizations are required to take their businesses online so that they can fulfill the changing demand of their customers.

Here is another example of a change in the market demand is that now, more and more people are becoming aware of environmental issues.

Therefore, they want to use products which are environment-friendly or are good for the environment. This has forced many organizations to change their production process and also products. They sell products which are environment-friendly in order to gain the loyalty and respect of their customers.

3) Changed technology

Technology is one of the most important factors which force change in the organization, and organizations are required to adapt to these changing technologies in order to keep up with the competition.

For example, in the past times, all works like record keeping, order placement, etc. were being done manually, but in the present time with the help of computers, there is no need to perform these works manually.

Similarly, in the production process, there were many tasks which workers were supposed to perform with hands, but at present, with automation, all of these works are performed using machines, and this has not only reduced the man-error but also sped up the production process.

Now customers have a platform to reach to the organization, and companies can respond to the queries made by customers quickly because of the presence of advanced technology.

Therefore, companies are required to stay focused and make changes in technology whenever they require to stay relevant in the market.

4) Social changes

Social change is also a crucial factor which causes a change in an organization. Companies are required to change their production process with the changes in the needs and aspirations of people.

Demands of people vary on the basis of the social environment and the status of people — factors like level of education, international influence, urbanization cause social changes.

For example, the demands of people living in an urban area will be different from the demands of people living in rural areas. People living in an urban area don’t much care about the price of the product, but they care about the quality and services provided by the organization.

Whereas, on the other hand, people living in rural areas are more concerned about the price of the product and care less about the quality of the product and they usually choose products cheapest among all available alternatives.

5) Failure

Failure is a factor which puts an end on the operations of some organization as these organizations take with shame and stops from taking risks with innovation ideas.

However, there are some organizations which rather than sitting back and thinking about bankruptcy has taken failure as a challenge and worked hard to change the failure into success by analyzing their weak operations and the operations which were not working well for them and changed them in order to proceed towards success.

A common example that everyone is aware of is the success story of Apple company. Steve Jobs, the founder of the company, was driven out of the company because of his aggressive behavior, and the company started losing its business after Steve left the company.

Steve was hired back by the company in 1997, and now we all know how his alliance with the Apple company has proved beneficial for it.

At present Apple is one of the largest companies in the world. Steve was not intimidated by the failure, but he has trust in his skills and vision. He took the company in his hands when it is at its lowest and take it to the peak of success.

Similarly, there are several examples of companies which took failure as a lesson and worked hard to become successful companies again. However, sailing through tough times is not a cup of tea of every organization, emerging from failure requires strength, vision, and a tremendous amount of hard work.

6) Competitive innovation

Competitive innovation forces companies to change. When a competitive company innovate something or do something which can be dangerous for your product then to meet the competition you need to make changes in your strategies and produce a product which is either equivalent to the product of your competitors or has something new which can attract customers.

Competitive innovation has been seen in the present times in smartphones companies. Apple is considered a leader of smartphones company, and it has been known for introducing the most innovative products in the market.

Other smartphone companies like Google, Samsung, OnePlus copies ideas from Apple with their personal touch to stay in the competition.

It seems that at present, all the companies have reached a saturation point of innovation which was apparent from the launch of Apple’ iPhone 11.

Even though the latest iPhones of Apple are full of improved feature, but it has not introduced anything out of the box like it was known for in the times of Steve Jobs.

Competitive innovation is both good and bad for the companies as it keeps a company on its toes to stay ahead of competitors and at the same time, it causes stress in the employees and management to come up with innovative ideas frequently.

7) Cost Cutting

Cost-cutting is also a factor that causes a change in an organization. Companies are forced to cut the cost of its products when a competitor company introduces a product with similar features but at lower prices.

Price is a factor which influences the buying decision of customers. Either you are too confident of your products like Apple, or you are required to cut cost according to your competitors in order to stay in the market.

8) Merger and acquisition

Merger and acquisition also a factor that causes a change in an organization. The merger means when two companies come together to work. When a merger happens, companies are required to change their structures to adapt to the work environment of one another.

Similarly, when a company acquires a new company, it is required to cut cost from some of its operations in order to invest in new products and services or for the development of the acquired company.

This is an internal change that an organization makes on its own and not forced by any external changes like we have discussed before in the article.

The organization might reduce staff to keep employees acquired with a new organization or changes the nature of jobs of some employees to manage both the companies effectively.

9) Change in the business structure

Another internal factor which causes a change in an organization is the change in the business structure. Like I have mentioned at the beginning of the article is that change is inevitable.

Management is required to change in the business structure to adapt to new technologies or in order to enhance the productivity of the organization.

Think of times when computers were introduced in the organization and organizations are required to change from bookkeeping to maintaining accounts in computers. Employees were provided with training and hiring was made to acquire employees to meet the requirements of new technologies.

Similarly, in the present times, too, the structure of the organization changed when they were needed to take their business online to meet the current demand of the customers.

10) End-of-life of products

Market changes, and with that, the need for products also changes. There are some products which stay in demand up to a certain time, and slowly their need diminishes from the market.

At that point, the company is required to think of some innovative ideas to produce new products so that they can stay relevant in the market.

For example, a few years ago mobile companies were producing mobile phones with keypad, but when touch screen mobile phones were introduced in the market, the value of keypad phones reduced drastically, and companies were required to change in their production process and start producing touch screen phones rather than producing touch screen phones.

The companies who have made changes in their production process when the life of their product ends stayed in business and we are all aware of the failure of Nokia company once it was one of the leading company of mobile phones and at present is hardly keeping up with the increasing standards of competition.

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