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What External Factors create the need for change in organisations?

What External Factors create the need for change in organisations?

The external forces that create the need for organizational change come from various sources. In recent years, the marketplace has affected firms such as AT&T and Lowe’s because of new competition. AT&T, for example, faces competition from local cable companies and from free Internet services such as Skype. Lowe’s, too, must now contend with a host of aggressive competi- tors such as Home Depot and Menard’s. Government laws and regulations are also an impe- tus for change. For example, when the Americans with Disabilities Act was signed into law, thousands of businesses were required to widen doorways, reconfigure restrooms, and add ramps. Even today, organizations continue to deal with the requirements of improving accessibility for the disabled.

Technology also creates the need for organizational change. Our chapter opening case perfectly illustrates how changing technology can impact organizations. The Internet has changed the way we get information, how products are sold, and how we get our work done. Technological advancements have created significant economies of scale for many organizations. For instance, technology allows Scottrade to offer its clients the opportunity to make online trades without a broker. The assembly line in many industries has also undergone dramatic change as employers replace human labor with technologically advanced mechanical robots. Also, the fluctuation in labor markets forces managers to initiate changes. For example, the shortage of registered nurses in the United States has led many hospital administrators to redesign nursing jobs and to alter their rewards and benefits packages for nurses, as well as join forces with local universities to address the nursing shortage.

As the news headlines remind us, economic changes affect almost all organizations. For instance, prior to the mortgage market meltdown, low interest rates led to significant growth in the housing market. This growth meant more jobs, more employees hired, and significant increases in sales in other businesses that supported the building industry. However, as the economy soured, it had the opposite effect on the housing industry and other industries as credit markets dried up and businesses found it difficult to get the capital they needed to operate. And although it’s been almost a decade since 9/11, the airline industry is still dealing with the organizational changes forced on them by increased security measures and other environmental factors such as high fuel costs.

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