Week 8 Final

Organization Development & Change 11 edition Thomas G. Cummings • Christopher G. Worley

CHAPTER

19

Transorganizational Change

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Learning Objectives

Explain the rationale and logic behind organization collaboration.

Describe and apply OD interventions that enable mergers and acquisitions.

Discuss and apply the OD process to strategic alliance formation and development.

Describe the process of network formation and transorganizational development as well as how networks change.

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Transorganizational Rationale

Transorganizational strategies allow organizations to perform tasks that are too costly and complicated for single organizations to perform

Goods and services are exchanged between organizations and transactions occur

Transorganizational strategies work best when transactions occur frequently and are well understood

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Transorganizational Systems

Members maintain their separate organizational identities and goals

Tend to be underorganized and member organizations are loosely coupled

Different from mergers and acquisitions

Network interventions may be appropriate

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Mergers and Acquisitions

Merger - the integration of two previously independent organizations into a completely new organization

Acquisition - the purchase of one organization by another for integration into the acquiring organization.

Distinct from transorganizational systems, such as alliances and networks, because at least one of the organizations ceases to exist.

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Merger and Acquisition Rationale

Diversification

Vertical integration

Gaining access to global markets, technology, or other resources

Achieving operational efficiencies, improved innovation, or resource sharing

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Merger and Acquisition Application Stages (1)

Pre-combination Phase

Search for and select candidate

Create and M&A team

Establish the business case

Perform a due diligence assessment

Develop merger integration plans

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Merger and Acquisition Application Stages (2)

Legal Combination Phase

The two organizations settle on the terms of the deal, gain approval from regulatory agencies and shareholders, and file appropriate legal documents

Operational Combination Phase

Implementing the operational, technical and cultural integration activities

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Strategic Alliance Interventions

When two organizations formally agree to pursue a set of goals

There is sharing of resources, intellectual property, people, capital, technology, capabilities or physical assets

Common alliances are licensing agreements, franchises, long-term contracts, and joint ventures

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Strategic Alliance Application Stages

Alliance Strategy Formulation

Clarify the business strategy and why an alliance is needed

Partner Selection

Leverage similarities and differences to create competitive advantage

Alliance Structuring and Start-up

Build and leverage trust in the relationship

Alliance Operation and Adjustment

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Network Interventions

Involves three or more companies joined together for a common purpose

Each organization in the network has goals related to the network as well as those focused on self-interest

Characterized by two types of change: (1) creating the initial network (transorganizational development) and (2) managing change within an established network

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Managing Network Change (1)

How a network was established influences the willingness and ability to change

Emergent properties or characteristics add complexity to change

Network behaviors and patterns can be expected and unexpected with complex interactions among members of the network

Knowledge of the “whole system” is required to implement change

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Application Stages for Transorganizational Development