MGT5MPT - Change and Stability in Organizations: A Management Essay

This essay examines the interplay between organizational change and stability, arguing that external environmental pressures drive change while internal organizational factors promote stability. It highlights technological advancements like Industry 4.0, regulatory shifts, market structure changes, and natural disasters as key external forces compelling companies to adapt. Simultaneously, it explores how internal strategies, such as adopting new technologies and adapting organizational structures, contribute to maintaining stability and competitiveness. The essay also addresses the challenges organizations face when implementing changes like Industry 4.0, including workforce skill gaps, financial constraints, and data security concerns. Ultimately, it supports the assertion that successful organizations must effectively navigate external pressures while fostering internal stability to ensure long-term survival and success.

INDIVIDUAL ASSIGNMENT
MGT5MPT – MANAGEMENT PRACTICE AND THEORY
Student name: Nguyen Minh Trang
Student ID: 20917410

Introduction
Organizational change and stability have increasingly gained attention among
organization theorists. Notably, a theorist supposes that "Pressure for change originates in
the environment. Pressure for stability originates within the organization". In my opinion, I
agree with these statements since there are a variety of external forces that cause the
change and transformation of the organizations and the organizations themselves need to
have a better understanding of the business environment to maintain stability. In this essay,
the external aspects that are constantly changing, forcing companies to adapt if they want
to survive are shown, including technological changes, regulatory changes, market structure
changes and natural disasters. Changes within the organization that are necessary for
sustainability, such as Industry 4.0 adoption are displayed as well.
Pressure for change originates in the environment
The number of radical changes in the external environment can impact the operation
of companies, which requires companies to transform to adapt for survival. The business
environment involves various aspects that are out of the control of the company's
management in the short term, as a result, creates threats and opportunities to the
company (Ward et al., 2007). Bourgeois mentions that there are three different points of
view of the outside influences to the organization in the history of management research
(Bourgeois, 1980). The first point of view concentrates on the factors having an effect on
activities of the organization like consumers, rivals, suppliers and regulatory agencies. The
following viewpoint emphasizes the attributes of outside influences, including complexity,
dynamism, and generosity. Another one focuses on managerial perceptions about these
external attributes, perceived environmental uncertainty.
Other researchers also reveal their perspectives on the relationship between
environmental variables and organizational changes. Berman and Bell suggest that
technological changes have a tremendous impact on organizations (Berman and Bell, 2011).
Industry 4.0, which is not only technological development but also a socio-economic
phenomenon, is currently happening and generates many challenges for manufacturing
firms. Along with this, following Reddy and Reinartz, the use of computer and internet

technology for a more efficient and effective economic value creation process considered
digitization impacts business models, organizational and management aspects, and entire
supply chain processes (Reddy and Reinartz, 2017). Rapid changes in the digital environment
affect organizations of all types in every industry. Thus, in order to respond to these
changes, businesses have to adapt themselves to keep ahead of the intense competition.
We are now in the world of digital technologies where big data, cloud, mobile are
increasingly affecting firms and the activities of people. Firms that have the abilities to
integrate digital technologies to transform processes, engage talent and drive new business
models will soon be profitable on average, have higher revenues, and achieve a more
extensive market valuation than competitors without a strong vision.
Besides, one of the forces causing firms to transform can be regulatory changes. It
mainly affects firms and agencies within the banking and law industry and the public sector.
For instance, the Glass-Steagall regulations of the United States Banking Act, which were
revoked, impacted the banking and financial services industries. Specifically, commercial
banking was separated from investment banking. Banks and financial services firms were
enabled to expand their offerings and develop new markets, which creates a considerable
chance for firms' development. This means that firms are required to transform to gain
competitive advantages in the new markets in terms of structure, strategy, skills, and
processes.
In addition, changes in the market structure can significantly influence the
companies, which is consistent with the study of Berman and Bell. The forces and changes
to which the organization must adapt include changes in customer tastes and valued
attributes of a product or service, new entrants competing with existing players, global
competition increasing, and economic forces that shift purchasing power or abilities of
different market segments (Berman and Bell, 2011). Essentially, when the competitive
environment changes sufficiently, the organization needs to adapt its internal structure to
remain competitive and effective in the new context. These market changes often increase
slowly on the organizations involved because they result from many small, incremental
forces and shifts in tastes, demographics, competitive pressures, and other economic forces
over time.

Moreover, it can be seen clearly that the impact of natural disasters on all types of
business. Both direct and indirect effects of natural disasters are destroying business
activities and their continuity. These events have created a significant negative consequence
on most business entities, including Micro and Small and Medium Enterprises (MSMEs),
during recent years. According to the extant literature, MSMEs are more vulnerable to
natural hazards than large corporations due to the fact that MSMEs: tend to operate in sub-
optimal locations; are smaller and financially weaker; have a more limited, usually local
market; tend to implement less disaster risk reduction measures and be more excluded
from recovery programs (Samantha, 2017). The impact of disasters such as floods in Sri
Lanka on businesses is an example. Land, equipment, and income losses have all been
highlighted as significant sources of financial stress for firms following disasters. Revenue is
estimated to decline as a result of decreased or no sales during and after the tragedy. Stock
damage or loss might threaten a company's ability to remain in business. Also, disruptions
after disasters regarding the provision of public and utility services such as electricity, water
supply and sewage, fuel, transportations and telecommunications can be responsible for
businesses closing down and can cause population dislocation. Dysfunction in facilities and
public infrastructure is a predicted effect of disasters requiring the business to look at
alternative or emergency logistic support to enable the company to function (Zhang et al.,
2004). Generally, when it comes to natural disasters, organizations need time and resources
to overcome the difficulties and restore the business.
Pressure for stability originates within the organization
According to structural contingency theory, companies change from one fit to
another to adapt to the changes of the environment. However, contingency theories of
organization structure have recently caused controversies. Schreyogg and Donaldson
suppose that organizational contingencies lead to pressures that the structure has to adapt
in the long term, which has been challenged for a more extended discussion of the attack on
organization theory and rebuttal (Schreyogg, 1980; Donaldson, 1995a).
As mentioned in Donaldson's study in 1987, a process stated in the theoretical model
of Structural Adaptation to Regain Fit (SARFIT) is that a company in fit may gain a greater

level of performance, creating more resources and expansion (Hamilton and Shergill, 1992),
such as geographic expansion, product innovation or diversification. Chandler (1962) shows
that organizations shift from the functional to the divisional product form since they shift
from being undiversified to being diversified in their product range. In a similar way, the
shift from single to diverse geographic areas creates a move from a functional structure to
geographic divisions (Egelhoff, 1982). Nevertheless, the growth in size may generate a misfit
with the current design, as a result, affecting productivity, which needs the company to take
into account.
In order to adapt to changes for maintaining stability, firms are becoming aware of
the utilization of advanced technologies to keep ahead of the intense competition in the
long run and to become adjusted to the uncertainty of the business environment like
reducing product life cycles, expanding the diversity and meeting the customer
requirements and needs, according to (Adolph et al., 2014). Besides, there are increasing
competition levels which make it vital for firms to enhance their capabilities and resources
for discovering opportunities to engage in new product development, boost productivity,
and decrease the period when the product is released to the market, as mentioned by (Lasi
et al., 2014). Firms are given chances to enhance their comparative advantage and a
decisive advantage against their rivals when they invest in new digital technologies. Nagy
(2019) further mentions that preceding manufacturing systems are out of date and cannot
satisfy customer expectations at present, as a result, the environment is affected. Thus,
enhancing productivity helps improve the production quality, reduce waste, and eliminate
the waste of energy in the manufacturing process. It can be said firms that draw on Industry
4.0 are allowed to approach the production that is not only sustainable but also
environmental-friendly, which in turn creates green and healthy products, production
processes, and supply chain.
Being involved in Industry 4.0 also helps firms in a wide range of aspects. It helps
organizations enhance the total sales, benefit in expenses reduction, and improve their
performance. Additionally, companies can manage production planning and scheduling and
utilize capacity, maintenance, and energy waste (Kagermann et al., 2013). Moreover,
companies are expected to replace the current business model with a new one for value

creation. By doing so, companies are likely to approach greater levels of customer
involvement. Since goods and services are getting closer to digitalization, channels tend to
become digitized, resulting in changes in consumer relationships and enhancements in
designs of innovative goods and services (Prem, 2015).
However, companies face a variety of challenges as adapting to Industry 4.0. To
begin with, the shortage of skilled workforce can pose problems and training employees to
fit shifted situations requires resources. It may require staff to work in a new way or
method, and changes in working conditions seem to cause arguments in the workplace, as
suggested by (Erol et al., 2016). Next, companies may face the problem of financial
resources shortage as implementing industry 4.0, for example, poor levels of
standardization, poor knowledge of integration, and issues related to data security.
Particularly, standardization issues may happen in correlations among different
organizations and in the tools and systems within production firms, as illustrated by Nagy,
2019. Several various sources are consistent with the idea of data security problems in
which they focus on cybersecurity and data ownership. Some believe new technologies may
bring the concerns of private information safety to a new level. Thus, technologies that help
protect people's information and privacy are considered (Cimini et al., 2017).
Also, according to Kovacs, it is essential to note the risk of fragility due to the growth
of production systems, which leads to unpredictability in the ecosystem (Kovacs, 2018). A
flexible interface is essential since it can successfully integrate parts, tools, and means.
Besides, it is needed to ensure the reliability and firmness of cellular communication for
embedded devices. The problem of coordination across organizational units can impact the
implementation of Industry 4.0. Further research shows that the lack of planning skills and
activities within the organization may hinder the digital transformation, for instance, lack of
business cases and feasibility studies for the need of investment in the data and systems
architecture (PwC, 2014). Another aspect that may influence the introduction of the shift to
digitalization is the culture inside the company. This is usually not identified even though
managing organizational resistance and achieving cultural acceptance of innovations is
generally a priority task during Industry 4.0 projects (Kiel et al., 2017b). In general,

companies need to find ways to overcome challenges for introducing industry 4.0, which
creates a number of advantages for them in the long term.
Conclusion
In conclusion, I totally agree with the statement "Pressure for change originates in
the
environment. Pressure for stability originates within the organization". This comes from the
fact that companies have to overcome barriers rooting from the business environment
where radical changes take place. Changes can be technological advancement with the
constant growth of Industry 4.0 and digitalization. Regulatory and market structure changes
can be forces causing firms to transform to maintain their positions in the marketplace
where they perform. It is also essential to highlight the direct and indirect impact of natural
disasters on all types of business, such as Land damages, equipment and revenue drops,
bankruptcy, population dislocation, and dysfunction in facilities and public infrastructure.
Thus, in order to address the external forces, alterations inside the organization should be
taken into account, and the introduction of Industry 4.0 should be adopted for the entire
organization. It is suggested for firms to invest in new technology, enhance their innovation
capacity and productivity, reduce their time-to-market to compete over competitors, and
replace the current business model with a new one for value creation. However, to proceed
with such an important adoption, firms face a wide range of barriers such as the shortage of
skilled workforce, employees re-training, the financial resources shortage, issues of
standardization, data security problems, the risk of fragility, poor technological integration,
the problem of coordination across the organizational unit, the lack of planning skills and
activities, and organizational culture. Firms should find ways to overcome difficulties in
implementing Industry 4.0 in order to achieve advantages such as improving the product
quality and reducing waste and energy, enhancing the sales volume, benefiting in expenses
reduction, and gaining advantages over rivals to succeed.

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