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Organization Development and Change

Transorganizational Change

Chapter Twenty Two

Learning Objectives
for Chapter Twenty Two
To understand the rational behind
transorganizational interventions
To compare and contrast the three types of
transorganizational OD interventions: mergers
and acquisitions, strategic alliance
interventions, and network interventions
within each category

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

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

Mergers and Acquisitions
Merger - the integration of two previously
independent organizations into a completely new
Acquisition - the purchase of one organization by
another for integration into the acquiring
Distinct from transorganizational systems, such as
alliances and networks, because at least one of
the organizations ceases to exist.
Merger and Acquisition Rationale

Vertical integration
Gaining access to global markets,
technology, or other resources
Achieving operational efficiencies, improved
innovation, or resource sharing

Merger and Acquisition
Application Stages
Pre-combination Phase
The organization must identify a candidate
organization, work with it to gather information
about each other, and plan the implementation and
integration activities
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

Strategic Alliances
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

Alliance Intervention
Application Stages
Alliance Strategy Formulation
Clarify the business strategy and why an alliance is needed

Partner Selection
Leverage similarities and differences to create competitive
Alliance Structuring and Start-up
Build and leverage trust in the relationship

Alliance Operation and Adjustment

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: creating
the initial network (transorganizational
development) and managing change within an
established network

Application Stages for
Transorganizational Development
Identification Convention Organization Evaluation

Who should Should a TS How to organize

for task How is the TS
belong to the be created?
performance? performing?
transorganizational Costs and
System (TS)? benefits
Leadership outcomes
Relevant skills, Task Quality of
knowledge, perceptions Policies and
procedures interaction
and resources Member
Key stakeholders satisfaction

Managing Network Change

Create instability in the network

Manage the tipping point
The Law of the Few: Salespeople, Mavens,
The Power of Context

Rely on self-organization