Understanding Change

BSc. in Accounting and Financial Management – Level 0

Student ID Number:
Lecturer Name:
Campus:
Group:
Academic Year: January 2022
Contents
Introduction.........................................................................................................................................2
1. Types of Business Organisations................................................................................................2
1.1 Sole trader..................................................................................................................................2
1.2 Partnership.................................................................................................................................3
1.3 Limited Liability Partnership.............................................................................................3
2. Advantages and Disadvantages..................................................................................................3
2.1 Sole trader..................................................................................................................................3
2.1.1 Advantages..........................................................................................................................3
2.1.2 Disadvantages......................................................................................................................4
2.2 Partnership.................................................................................................................................4
2.2.1 Advantages..........................................................................................................................4
2.2.2 Disadvantages......................................................................................................................4
2.3 Limited Liability Partnership...................................................................................................4
2.3.1 Advantages..........................................................................................................................4
2.3.2 Disadvantages......................................................................................................................5
3. Type of Organisation to set up in the future or be part of........................................................5
4. Types of Organisational Change................................................................................................5
4.1 Strategic transformational change...........................................................................................5
4.2 People-centric organizational change.......................................................................................5
4.3 Structural change......................................................................................................................6
4.4 Remedial change........................................................................................................................6
5. Change Strategies Proposed by Kotter and Schlesinger...........................................................6
5.1 Education and Communication................................................................................................6
5.2 Participation and involvement..................................................................................................6
5.3 Facilitation and support............................................................................................................6
5.4 Negotiation and agreement.......................................................................................................7
5.5 Manipulation and co-optation..................................................................................................7
5.6 Explicit and implicit coercion...................................................................................................7
6. Successful Implementation of Change.......................................................................................7
Conclusion............................................................................................................................................7
Introduction

The types of organization are always analyzed by future entrepreneurs and managers to
identify both the advantages and disadvantages they will face. Organizational change is the
order of the day for companies at the beginning of the road or for companies with decades of
experience in the market, and therefore this concept will be approached from the perspective
of Kotter and Schlesinger (2013). Last but not least, the strategies used and proposed by the
same authors in order to maneuver companies to success will be discussed.

1. Types of Business Organisations

Choosing the right type of business organization for a company is an important decision that
requires time for analysis and thorough research because there are a wide range of options
from which managers can choose the right type of business organization for their company.
Thus, this decision is in relation to the criteria and personalization of each company. Carnall,
C. (1999).

Managers analyze and choose one of the following types of business organizations: sole
trader, limited liability company, partnership or limited liability company. Each of these
types of business organizations offers both advantages that can lead the company to success,
but also disadvantages.

1.1 Sole trader

Sole trader is one of the most used and chosen type of business organization for a manager or
entrepreneur at the beginning of the road, who does not have a large investment and who
follows his passion. Thus, sole trader is the type of business composed of only one owner, but
which can employ several people under its subordination. He runs his own business, is the
sole investor of the company, and most of the time is the only one who handles all the
departments of the company (sales, production, marketing). Kotter, J. & Schlesinger, L.
(1979).

Even if the owner of this type of company can hire people under his subordination, he will be
solely responsible for the future of his business, because this type of business organization
implies a unique responsibility. Specifically, in case of financial failure, financial or material
debts or losses of any kind, the sole owner will be the only one who will bring and contribute
with his own money to raise the company.

1.2 Partnership

This type of business organization is somewhat similar to sole trader, but the major
change comes from the fact that in this type of business organization there are at least two
business partners who will lead the business management. Thus, both the responsibilities and
the profits will be shared between the business partners. In case of a considerable profit, it
will be divided between the business partners, as a percentage in relation to the contribution
brought by each one in the company. Of course, they will also be financially responsible if
the company is in a financial stalemate. The existence of at least 2 business partners
contributes to a development of the company because both intellectually and financially there
will be more investors who will contribute money and ideas. Martin, A. J., Jones, E. S., &
Callan, V. J. (2005).

1.3 Limited Liability Partnership

This type of business organization is more often chosen by managers because of the
disadvantages more pronounced than the advantages of this company, but, nevertheless, this
type of business organization can bring more advantages if it is chosen for the right company.
The limited liability partnership represents a partnership in a joint venture in a business
between the business partners. It is necessary to have at least 2 business partners, but who
will have a limited responsibility over the company. Therefore, they will not be responsible
for bringing contributions to the company in case of debts, nor will they have to take money
out of their own pocket to raise the company, because their liability is limited. Schermerhorn,
J. G., Hunt, J. G., & Osborn, R. N. (2005).

2. Advantages and Disadvantages

2.1 Sole trader

2.1.1 Advantages
The main advantages for sole traders are: not sharing the company's profit and keeping it or
investing it depending on the decision of the sole owner. Also, the fact that he has control of
the whole business without having to ask the permission of another partner, but also the fact
that he can evolve and grow the company gradually according to his own knowledge are also
some advantages. Armenakis, A. & Bedeian, A. (1999)

2.1.2 Disadvantages
Of course, there are a number of disadvantages to this type of business organization, such as:
limited financial capital, as the sole owner will not have enough income and financial funds
to finance the company. A second disadvantage is that the sole owner will have to cover the
company from his own income, in case of debts, but also the fact that the intellectual
resources, the development ideas come from only one person and this will limit to some
extent business.

2.2 Partnership
2.2.1 Advantages
One of the advantages of choosing this type of business organization is that the financial,
intellectual, material and all kinds of resources are more numerous because they come from
several business partners. Also, the division of responsibilities and tasks in the business leads
to a delegation of tasks and an increase in the number of employees who contribute to the
development of the company. By the fact that there are several partners specialized in the
field of management or not only, it represents an added value for the company. Burke, W. W.
(2008)

2.2.2 Disadvantages
Regarding the disadvantages of this type of business organization, these are: the possibility of
misunderstandings or inconsistencies between the ideas of business partners. Also, the tax
laws that determine the partners to pay their own contributions to the state are a negative
point for this type of business organization. However, the possibility of different objectives
for business partners is the main weakness.

2.3 Limited Liability Partnership

2.3.1 Advantages
The advantages of this type of business organization is that the business partners have limited
liability, therefore they will not be responsible with their own money or assets for the failure
or debts of the company. Also, the dissemination and delegation of managerial tasks between
business partners is another advantage, but also the intellectual contribution of each owner for
the development of the company.Levin, B. (1993).

2.3.2 Disadvantages

Regarding the disadvantages of choosing this type of business organization, it consists in the
fact that: the image that this type of business organization inspires on the market and in the
business environment is not a confident one and does not inspire security and credibility. This
disadvantage is the cause of another disadvantage, namely that the partners are obliged to
have a communication with each other, to act together or to make decisions by mutual
agreement. Therefore, the individual decisions of the partners can lead the company in
several meaningless directions. Kotter, J. & Schlesinger, L. (1979).

3. Type of Organisation to set up in the future or be part of

I consider that regardless of whether I will be in the position of business partner or employee
in a company, I will analyze then the decision of which type of business organization I want
to be part of. But, as a partner, if I am at the beginning of the road and I will not have a
business partner, then I will opt for sole trader, but I consider that the existence of a business
partner who will work with me to grow a company will be more efficient because the
company will have a greater possibility of financing but also more in-depth knowledge and
lots of more partners. Therefore, I would opt for partnership. I would choose the same thing if
I were hired, for the same reasons. Kavanagh, M. H. & Ashkanasy, N. M. (2006).

4. Types of Organisational Change

4.1 Strategic transformational change

This type of change occurs as a result of decisions made at the managerial level that aim at a
development or marketing strategy in the company. These changes are intended to influence
the flow of things and the approach of the company, but it is necessary to have a planning of
changes that will take place.
4.2 People-centric organizational change
This type of change is focused on people, on establishing new rules or policies or decisions in
hiring or firing people in the company. People, most of the time, are not happy about the
changes and do not accept it so easily, only if an empathic approach is adopted in order to
empathize with people's feelings. This strategy is based on this type of approach.

4.3 Structural change

Structural changes are focused on strategic changes that take place only at the hierarchical
level in a company, changes in team organization and responsibilities, changes in team level,
or different departments. However, this type of strategy is similar to people-centered change,
as it will directly affect people inside or outside the company.

4.4 Remedial change

The remedial changes are aimed at fixing a situation in the company, they are as a result of
some decisions and things that have already taken place in the company and have not been
successful. The benefit of this type of change is that it is beneficial and necessary for
companies and that the appreciation of success is simple. Hambrick, D. C. & Cannella, A. A.
Jr. (1989).

5. Change Strategies Proposed by Kotter and Schlesinger

Kottler and Schlesinger Article from resources

5.1 Education and Communication

Education is the first stage and a stage that must persist forever, because it leads the business
to change. It also helps people and team members understand the need for change and
perceive it as beneficial.

5.2 Participation and involvement

This stage is essential because it involves the involvement of the members of the company or
of the team in order to instil in them the resistance in the process of change and to prepare
them and announce in advance the stages that will follow. Boohene, R. & Williams A. A.
(2012).
 5.3 Facilitation and support
This stage involves supporting people in the process of change and being with them to get
over the changes that are taking place more easily. Therefore, training and education are
provided to provide them with moral support.

5.4 Negotiation and agreement

Negotiating and accepting the opinion of others is an incentive for those involved in change
and they accept it easier and faster. Thus, it encourages people to work more with pathos and
pleasure because they will know that they also have an involvement in those changes.

5.5 Manipulation and co-optation

The last step is used to attenuate the resistance to change. Manipulation at this stage is
information used in a selective way to encourage people to accept the decisions and changes
that will take place.

5.6 Explicit and implicit coercion

This stage has the role of mitigating resistance to change and the radical decisions that take
place. However, it is also at this stage that threats are made to team members to accept the
changes. Carnall, C. (1999).

6. Successful Implementation of Change

In order for these stages of authors to be successful, it is important to take into account their
scams and apply all stages of change to the same extent. But to make it easier, it is important
for people who are struggling with these changes to know in advance, to be involved in the
decisions they make, and to ask for their opinion on the new changes that will take place.

Conclusion
Choosing a type of organization is a very important decision because this decision will mark
the future of the company in front of customers and in front of future partners, suppliers,
employees and anyone who will have a direct or indirect contact with this company.

Therefore, the analysis of three types of business organization is one of the topics discussed
in this essay, but also the advantages and disadvantages of three types of business
organizations. This analysis will also count in the discussion and analysis of the arguments
brought in this essay regarding the type of business organization that I would choose for my
own business, or for the company in which I will work.

References

1. Armenakis, A. & Bedeian, A. (1999). Organizational change: A review of theory and

research in the 1990s. Journal of Management, 2(3), 293-315.
2. Boohene, R. & Williams A. A. (2012). Resistance to organizational change: A case
study of Oti Yeboah Complex Limited. International Business and Management, 4(1),
135-145.
3. Burke, W. W. (2008). Organization change: Theory and practice. London: Sage.
4. Carnall, C. (1999). Managing change in organizations. London: Prentice Hall.
5. Carnall, C. (1999). Toward a theory for the evaluation of organizational change.
Human Relations, 39(8), 745-766
6. Hambrick, D. C. & Cannella, A. A. Jr. (1989). Strategy implementation as substance
and selling. Academy of Management Executive, 3(4), 278-285.
7. Kavanagh, M. H. & Ashkanasy, N. M. (2006). The impact of leadership and change
management strategy on organizational culture and individual acceptance of change
during a merger. British Journal of Management, 17, 81-103
8. Kotter, J. & Schlesinger, L. (1979). Choosing strategies for change. Harvard Business
Review, 57, 106-114.
9. Kotter, J. & Schlesinger, L. (1979).. Applied organizational change in industry:
Structural, technical and human approaches. In W. W. Cooper, H. J. Leavitt &M. W.
Shelly (Eds.), New perspectives in organization research (pp.55-70). New York:
Wiley.
10. Levin, B. (1993). School response to a changing environment. Journal of Educational
Administration, 31(2), 4-20.
11. Lunenburg, F. C. & Ornstein, A. C. (2008). Educational administration: Concepts and
practices. Belmont, CA: Wadsworth.
12. Martin, A. J., Jones, E. S., & Callan, V. J. (2005). The role of psychological climate in
facilitating employee adjustment during organizational change. European Journal of
Work and Organizational Psychology, 14(3), 263-89.
13. Mullins, L. J. (2005). Management and organisational behavior. Harlow, England ;
New York : Prentice Hall/Financial Times.
14. Myers, K. & Robbins, M. (1991). 10 rules for change. Executive Excellence, 8(5),
910.
15. Schermerhorn, J. G., Hunt, J. G., & Osborn, R. N. (2005). Organizational behavior
(Ninth edition). United States of America: John Wiley & Sons Inc