Organisational decision making model case study

Facilitating organisational
decision making: a change risk
assessment model case study
Charalampos Apostolopoulos and George Halikias
School of Mathematics, Computer Science and Engineering,
City University London, London, UK
Krikor Maroukian
Department of Informatics, King’s College London, London,
UK, and
Georgios Tsaramirsis
Department of Information Technology, King Abdulaziz
University,
Jeddah, Saudi Arabia
Abstract
Purpose – This paper aims to take the challenge to propose a
novel modelling approach named
Change Risk Assessment Model (CRAM), which will contribute
significantly to the missing formality of
business models especially in the change risk assessment area
and decision-making. Organisational
change risks are assessed with the aid of analytic hierarchy
process (AHP) in an attempt to define the
internal dynamics of organisational change management within
project management eliciting also risk
cause-and-effect relationships.
Design/methodology/approach – The study discusses

interviews/survey/AHP.
Findings – The study presents the following findings. Change
risk factors assessment (identification
and prioritisation) recommendations (see Case Study)
integration of change management; project
management; risk management top four risk factors, namely,
leadership, communication, project
management team and culture.
Research limitations/implications – As projects can be different
in a variety of factors (quality,
scope), an exhaustive list of risk factors cannot be identified.
There is a continuous risk identification
process throughout the projects’ life cycle. For example, many
risks can be classified initially as
unknown and can be refined after the initiation phase of the
project. AHP factors limitation (eight per
level) possible bias (survey analysis).
Practical implications – With the aid of modelling and
especially CRAM, business change risks can
be assessed numerically and prioritised. Several risk factors and
related attributes were identified and
categorised. This empowers project managers or other
stakeholders to make proper decisions about
whether to take on or abandon respective organisational or
project changes.
Social implications – One of the values of CRAM is that it can
be regarded as a global change risk
assessment method that can be applied regardless of project
type, size or organisation. Moreover, it has
the advantage that it can be used by any kind of project, as the
method is designed to be tailored to
specific needs, taking significant environmental change risk
factors into account. AHP has numerous
uses in operational research, in project management and in
general in areas where decisions (evaluation
and selection) have to be made. The analysis of the case study

presented, indicated that it is vital to
assess the degree (impact) that each risk attribute poses to
address complex organisational decisions.
Originality/value – CRAM aims to bridge the gap between
theoretical and applied work in the
integrated research field of change management, project
management and risk management.
Furthermore, the approach attempts to develop a novel
systematic methodology (model) for assigning
The current issue and full text archive of this journal is
available on Emerald Insight at:
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JM2
11,2
694
Received 8 May 2014
Revised 16 September 2014
19 November 2014
19 January 2015
9 March 2015
Accepted 9 March 2015
Journal of Modelling in
Management
Vol. 11 No. 2, 2016
pp. 694-721
© Emerald Group Publishing Limited
1746-5664
DOI 10.1108/JM2-05-2014-0035
http://dx.doi.org/10.1108/JM2-05-2014-0035

probabilities in attributes (criteria) pair-wise comparison and
more specifically, modelling and
assessing change management risks, adding a different
perspective and technique to the research area.
Keywords Decision-making, Change management, Management,
Modelling, Risk management,
Operations management, Risk analysis, Analytic hierarchy
process, Project management,
Decision analysis, Change risk assessment model
Paper type Research paper
1. Introduction
Business environments are subject to constant change, and risk
facilitation processes
such as change management and risk management are needed to
maintain an up-to-date
structured set of specifications for business requirements. Both
the current
organisational architecture and the architecture at the aftermath
of a change can be
visualised through models; further, in this way, the purpose of
change and the
associated risks can be comprehended and analysed more easily
by the organisation.
The field of modern project management which can facilitate
such processes is not
new (Cleland, 1994; Chaffey, 1997; Maylor, 2001) and started
to emerge in the 1990s.
Actually, what seems to have changed over the past decade is
the evolution of
techniques applying theory into practice. Projects and
organisations are subject to

change, simply because the business environment changes. One
of the aims of
structured project management methodologies is to adapt to
changes, minimise risk and
ultimately ensure project success. Projects have significant
differences in terms of
plethora of factors, including factors that are the well-
established, such as cost, time,
scope and quality.
The development and establishment of standards, especially for
project management
frameworks such as PMBOK®, PRINCE2®, APMBOK,
SCRUM, ISO 21500 and others
are not only simply good practice guidelines but also legal
requirements in complex
project environments. The main strength of such frameworks
lies in their
comprehensive formality, narrative of collective experience and
accuracy in describing
specific processes for specific purposes. These global project
management frameworks
and standards have accounted for and are usually coupled with
risk management
quantitative and qualitative techniques; nevertheless, the
facilitation of change risk
assessment is a critical process which can be further developed.
This research paper proposes a novel modelling approach named
Change Risk
Assessment Model (CRAM), which will contribute to the
development of formal
business modelling techniques, especially in the change(s) risk
assessment area. Project
Change Risks are assessed with the aid of analytic Hierarchy
Process (AHP) so as to

define the internal dynamics of change management within
project management
eliciting also risk cause-and-effect relationships. The proposed
model is mainly
described in the methodology, and discussion and analysis
sections have been tested
commercially by means of a case study.
AHP is an established and structured multi-criteria hierarchical
technique for
making complex decisions. It was first conceived in the 1970s
by Thomas L. Saaty and
addresses decision-making problems involving multiple criteria
whose relative
importance is determined via pair-wise comparisons. This is
achieved by constructing a
matrix which exhibits the relative importance of each criterion
relative to the others. In
short, AHP is “a well defined mathematical structure of
consistent matrices and their
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decision
making
associated eigenvectors ability to generate true or approximate
weights” (Forman and
Gass, 2001).
Briefly, the steps using AHP as described by Saaty (2008) are
as follows:
• Definition of the problem and determination of the kind of

knowledge sought.
• Decision structure hierarchy (top; decision goal), followed by
the objectives from
a broad perspective, from intermediate levels (criteria on which
subsequent
elements depend) to the lowest level (usually a set of
alternatives).
• Construction of a set of pair-wise comparison matrices. An
element in an upper
level is used to compare the elements in the level immediately
below.
For the utilisation of the AHP approach, risks are usually
presented in one of the
following forms: narrative (descriptive), qualitative or
quantitative (Technical Risk
Assessment, 1986). Effectively, the descriptive way of risks
processing, lacks
mathematical analysis.
Saaty (2001) argued that:
[…] by making paired comparisons of the elements on a level in
terms of the elements of the
next higher level, it is possible to decide on an appropriate
choice of that level. This provides an
overall flexibility because hierarchies are flexible as they can
be altered and accommodate
more criteria.
Apart from the introduction, this paper is organised as follows:
the next section presents
literature findings in terms of AHP modelling used in various
industries. Section 3

provides an insight of the three CRAM’s interrelated processes,
and Section 4 presents
the methodology used to assess change risks. Moreover, in this
section, the “RingTokk
Systems” case study is presented. Section 5 analyses and
discusses the CRAM’s results,
Section 6 concerns research limitations, and finally, Section 7
presents the conclusions of
the paper together with the authors’ suggestions for future
work.
2. Literature review
Change management and risk management are usually regarded
as separate processes
normally implemented throughout the life cycle of a project.
However, what seems
critical for an organisation is to adapt to specific customer
requirements and concepts
such as strategic business planning, customer satisfaction,
market adaptation,
flexibility and subsequently efficient and effective business
change management
(Apostolopoulos and Simpson, 2009). Contemporary structured
project management
methodologies currently fail to estimate and address risk in
organisational change
management in a detailed manner, in contrast to other aspects of
the project
management processes.
Risk can be defined as “any potential problem that threatens the
success of a project”
(Taylor, 2006). Focus on project risk management has moved
from quantitative methods
to structured risk management processes with a view to
understanding and embedding

risk management throughout the project’s life cycle (Artto,
1997). PRINCE2® (2009,
p. 311) defines risk as:
[…] an uncertain event or set of events that, should it occur,
will have an effect on the
achievement of objectives. A risk is measured by a combination
of the probability of a
perceived threat or opportunity occurring and the magnitude of
its impact on objectives.
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In PMBOK® (2013, p. 558), it is defined as “an uncertain event
or condition that, if it
occurs, has a positive or negative effect on one or more project
objectives”. A simpler
definition of risk in terms of probability of occurrence and its
related impact can be given
by the following equation (1) (Heldman, 2005; Kendrick, 2009,
Kerzner, 2000):
Risk � Probability � Impact (1)
In effect, risk estimation can address the question of “what can
go wrong?” In other
words, what is the likelihood of an event deviating from its
expected and planned course
or occurrence? Business environments are subject to constant
change and risks;
however, with the aid of CRAM, organisational change risks

can be assessed effectively.
Not all changes have the same implications (risk impact) for
projects as some might
be accepted and some others might not. Similarly for risks,
changes have an analogous
impact. The more changes are accepted during the project’s
execution phase (Baca,
2005), the better chance are for project delays.
In the literature, there are many different models for managing
change. These include
Lewin’s (1951) three-stage model (unfreezing, confusion and
refreezing), Bullock and
Batten’s (1985) planned change phases (exploration, planning,
action and integration)
and Bridges (1991) transitional phases management (ending,
neutral and new
beginning). Overall, these are mainly descriptive, multi-stage
processes which exclude
risk-assessment (Apostolopoulos et al., 2014).
Further to AHP, and as described in Section 3.2, other
techniques or tools can also be
applied to assess risks. For example, Ackermann et al. (2014)
argued that there is a need
for new approaches to be considered as far as managing risks in
projects are concerned.
The new approach can take into account multiple perspectives,
such as problem
structuring with the use of risk maps which can improve risk
analysis. This approach is
potentially applicable in association with CRAM, as causal
mapping technique captures
not only the risks but also their impacts.

Furthermore, risk management quantitative and qualitative
techniques reported in
various publications, such as Management of Risk by OGC and
Practice Standard for
Project Risk Management by PMI®, indicate the vast
opportunities presented in
identifying, assessing, counteracting on risks and also
measuring organisational
tolerance against risk maturity models.
Literature findings indicate that AHP has been used extensively
in various sectors
and complex decisions such as US Nuclear Regulatory
Commission to allocate US$100
million portfolio; US Department of Defence to allocate
appropriate resources to diverse
activities; British Airways in 1998, to choose the entertainment
system vendor for its
entire fleet of airplanes; Xerox corporation, to allocate US$1
billion for research projects
(Saaty, 2008).
Shiau et al. (2002) used a survey (400 respondents) and AHP for
the selection of
subcontractor in construction projects. Other case studies can be
found in the paper of
Forman and Gass (2001) such as General Motors, which used
AHP for car designers to
evaluate alternatives, perform risk management and to arrive at
the best and most
cost-effective automobile designs.
In relation to project management and associated risks
assessment, Mustafa and
Al-Bahar (1991) used AHP to analyse project risks.
Specifically, they developed a series

of rules-of-thumb on construction management projects.
According to their views, many
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construction projects failed due to inconsistency of time, cost
quality goals and project
requirements.
Dey (2002) analysed the risk management in terms of cost
achievement and
concluded that it should be carried out before implementing
work. More recently, Palcic
and Lalic (2009) used AHP as a tool for evaluation and
selection of projects. In addition,
Pakseresht and Asgari (2012) used AHP to determine the
critical success factors in
construction projects.
From the above case studies, it is evident that AHP is an
established method for
decision-making, deployed extensively in project management
and in industry domains
where critical decision-making is required. Actually, the main
idea for CRAM research
originated from the fact that project changes incur risks which
have to be assessed and
controlled. The above case studies take into account business
project factors which were
considered for the design of CRAM.

In this context, contemporary project management frameworks
such as PRINCE2®
(2009) explain that projects bring about change and
consequently change incurs risk;
more specifically, risk taking in projects is inevitable. On the
other hand, PMBOK®
(2013) argues that risk and uncertainty are high during the
beginning of the project. In
effect, the “cost” of changes is also high, as results cannot be
determined as yet. As time
progresses, these variables have increasingly less impact as
decisions are reached and
during the projects’ closure phase, project deliverables are more
likely to be accepted
among stakeholders.
It is the aim of this work to identify and examine different
attributes beyond the
constraints which are extensively referenced in PMBOK® and
PRINCE2®, showing that
the four major ones (time, cost, quality and scope) are just the
peak of the iceberg. What
lies beneath are factors related, for example, to leadership,
communication, culture,
project management team (PMT) characteristics and others
(Apostolopoulos et al.,
2014). However, risks cannot be eliminated; Stoelsnes (2007)
expressed the view that
events or conditions will appear in projects that are difficult or
even impossible to
predict prior to an activity.
Even though the scope of presented references mainly applies to

project-oriented
environments, it is the purpose of this paper to extrapolate on
these results by indicating
the validity of the effectiveness of CRAM approach to change
risk management in other
industry domains as well. The constituents of CRAM and its
effectiveness in addressing
challenges identified in this section are described in Section 3.
3. Defining the change risk assessment model
Business environments and associated decisions are complex.
Furthermore, as more
changes occur, the more complicated project management
becomes. Changes and the
processes related to managing risks differ among organisations,
as there is no
one-size-fits-all or all-you-can-eat model.
CRAM’s aim is to propose an integration of change management
within
contemporary project management frameworks, alongside a risk
assessment
mechanism in the form of a hierarchical model. The end-result
is a novel model approach
for assessing management risk in business changes. It can be
easily integrated with
contemporary project management frameworks, as the factors
(and related attributes)
are widely applicable to the broader landscape of business
environments. For the
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assessment of change risks in terms of mathematical formulae
and results validity, AHP
will be deployed.
This is a novel approach, both theoretically and practically,
which adds the notion of
risk assessment for change management within project
management methodologies.
CRAM attempts to take into account various environmental risk
factors which influence
project success. These risk factors are modelled and can be
assessed numerically in a
top-down hierarchical model approach. Nevertheless, not all
risks are the same or have
the same priorities. A useful application of the model will, for
example, assist a project
manager to comprehend the relationships between the different
factors of the model and
enhance his/her ability to judge, evaluate and assess risks. As a
result, the modelling
community can benefit from the proposed approach by applying
similar modelling
practices to other industries as well. Figure 1 shows a high level
diagram of the research
model approach:
The inputs of the model include risk factors which are related to
project or
organisational change and in a wider context to change
management. Respondents can
appoint proportional weights (qualitative analysis) after
completing a respective risk
questionnaire using a linear rating scale, which will be
discussed in Section 4. With the

aid of AHP, the outputs of the model (risks) are prioritised and
assessed for further
decision analysis.
The proposed model is a novel modelling approach for assessing
business change
management risk. The authors reflect on prior research and
elicit collective knowledge
from contemporary project management frameworks. CRAM’s
approach can be
relevant to business problems without having project
management framework inputs
as a prerequisite, as the factors and related attributes identified
are widely applicable in
the broader scope of project business environments and
operational research
(Apostolopoulos et al., 2014).
Overall, the aim is to fit to project business scenarios as a
repeatable process
enhancing business decisions. The model is flexible enough so
as to allow potential
users to decide upon their own risk attributes (add/delete) and
test the sensitivity of the
solution or result to new information.
The three interrelated processes that construct the elements of
CRAM are as follows:
(1) risk identification;
(2) risk assessment; and
(3) risk monitoring and control.
3.1 Risk identification
The step towards defining CRAM’s risk factors concerns the
identification process.
Risks can be practically identified in numerous environments,

and, in fact, the difficult
Figure 1.
CRAM high level
diagram
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making
part is not only to identify them but also to control them. The
primary goal of Risk
Identification process is to identify the threats and opportunities
which may affect the
projects’ objectives and consequently deliverables.
In any business case and irrespective of risk categorisation, the
proposed tools and
techniques to identify change risks can include but are not
limited to the following:
• SWOT analysis;
• change/risk surveys;
• delphi technique;
• PESTEL analysis;
• risk breakdown structure;
• interviews; and
• brainstorming sessions.
3.2 Risk assessment
The second step towards defining CRAM’s risk factors concerns

the assessment
process. This step involves the Risk Estimation and Evaluation
phases of change risks.
Change, if uncontrolled, can be associated with activities of
uncertain outcome(s) which
would be deemed unwanted deliverables from the viewpoint of
project stakeholders.
However, when change management and risk management are
coupled, risk impact can
be reduced. This is because risk is initially estimated at the
planning stage of a project,
and consequently, there is time to develop a risk mitigation plan
and take necessary
preventive actions.
The majority of quantitative methodologies based on
probabilities carry less
ambiguity and imprecision, meaning that they have increased
accuracy as far as the
assessment of gathered information on identified risks is
concerned. Quantitative
methods interpret results more formally compared to narrative
descriptions or
qualitative measurements.
Estimation can facilitate project risks in terms of the probability
of occurrence and
impact numerically. The next phase, Evaluation, assesses the
overall effect of all
identified aggregated risks. Certain risk types, such as financial
risks, can be evaluated
in numerical terms. Overall, risk assessment can be
accomplished with the aid of a
variety of methods and techniques, such as the following:
• simulations;

• Monte Carlo analysis;
• critical path method;
• AHP;
• risk maps;
• Bayesian probability and statistics; and
• probability trees.
As for the Evaluation activities and results, these can be
recorded by a change controller
by means of benchmark questions, such as:
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Q1. Were all implemented non-standard changes assessed?
Q2. Did the approved changes meet the intended goal?
Q3. Concerning result, does it satisfy stakeholders and more
specifically conform to
customer’s requirements?
Q4. Were there any unplanned changes found and what were the
associated risks?
Q5. Concerning the implementation phase, did it exceed the
project’s constraints?
Q6. Are the results documented for example in the change/risk
log?
The main reason why AHP approach was selected and integrated

with CRAM as a risk
assessment process is because business environments are
complex in a way that the
more changes are required towards the finalisation phase of a
project, the more
complicated project management can be. This can be justified
by the fact that there is
significant interaction among multiple factors affecting complex
decisions concerning
change. The theory of AHP relies on a strong proof of concept,
an established decision
making technique (35� years of extensive research and usage)
and proven applicability
to a broad set of domains.
Overall, AHP is a systematic method for prioritising a list of
objectives leading to a
decision. The same is also true for risk taking; in this case,
decisions involve which risks
are “affordable to take on”. Risks which cannot be estimated or
even controlled may
have a severe impact on outcome of a project.
In effect, it is important to determine the degree (impact) and
the priority that each
attribute has, address complex situations, identify criteria and
measure overall change
risks, in a hierarchical way, based on priorities and overall risk
tolerance.
3.3 Risk monitoring and control
The third and final step towards defining CRAM’s risk factors
concerns the monitoring
and control process. The Risk Monitoring and Control process
mainly intends to
identify, analyse, plan and track new risks, constant and

periodic testing and review of
initially identified risks, monitor and control existing or
residual risks. Moreover, the
process is concerned with the review of proper execution of risk
responses while
evaluating their overall effectiveness.
Risk monitoring and Control can be accomplished with the aid
of a variety of methods
and techniques, such as:
• risk reassessment;
• meetings;
• variance analysis;
• trend analysis; and
• risk auditing.
Significant contribution to the evaluation of outcomes of CRAM
processes can be
provided by a Subject Matter Expert (SME). An expert can be a
person who is an
authority in a particular research or topic, such as an individual
(project manager,
change manager and risk manager) or a group of people (Project
Steering Committee
and Change Advisory Board) which can influence and advise
further to CRAM’s results.
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Specifically for PMBOK®, the term “Expert Judgment” is used
as a qualitative
technique in almost all processes, as advice and guidance
received from knowledgeable
and experienced stakeholders. For example, risks may be
identified, assessed (in terms
of probability and impact) by experts with relevant experience
in similar projects or
business areas PMBOK® (2013, p. 327, p. 332, p. 345).
Moreover, these experts can assist
in the risk management plan by suggesting the appropriate risk
strategies to be
followed either for threats (avoid, transfer, mitigate and accept)
or opportunities (exploit,
share, enhance and accept). To this frame, Render et al. (2012)
define “Jury of Executive
Opinion” as a qualitative or judgemental approach. Specifically,
and similarly to SME,
this method collects opinions of a small group of high-level
managers, often in
combination with statistical models.
Besides the SME technique for testing and reviewing purposes,
the use of case
studies can help to extend experience, and compare what is
known through earlier
research. A database of case studies can be created to assist to
the overall contextual
analysis.
4. Methodology
Initially, a change(s) risks(s) hierarchy tree was constructed
(Figure 2) to decompose and
populate the parent/child nodes with more detailed attributes
rationally. The only
restriction in the hierarchical arrangement of elements (factors)

is that any element in
one level must be capable of being related to some elements in
the next higher level; this
serves as a criterion for assessing the relative impact of
elements in the level below.
A tree model structure can be defined as a collection of tree
elements (the nodes),
where each node can be assigned a relative value together with
a list of references to
nodes named the “children”. A parent node, being the converse
notion of a child, is
positioned at a higher level.
The lines connecting elements are called “branches”. The root is
the starting node
(highest node in the hierarchy). A node’s “parent” is a node one
step higher in the
hierarchy (i.e. closer to the root node) and lying on the same
branch. A node has at most
Figure 2.
CRAM prototype
model
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one parent, and finally, an attribute is a characteristic of the
options being evaluated.
Saaty (1987, p. 166) argued that a hierarchy:

[…] is a simple structure used to represent the simplest type of
functional dependence of one
level or component of a system, in a sequential manner; a
convenient way to decompose a
complex problem in search of cause-effect explanations which
form a linear chain.
CRAM’s node hierarchy is indicated in Table I, which consists
of one core (root) node,
eight parent nodes and five child nodes.
However, the root node is affected by the three risk processes
described in Section 3:
• risk identification;
• risk assessment; and
• risk monitoring and control.
This means that Levels 2 and 3 risk attributes are affected from
outputs of CRAM’s
interrelated processes.
The initial design of the CRAM nodes hierarchy involved a set
of arranged
semi-structured interviews and focused group discussions
(delphi technique) with 23
high level executives from various industries in a three-month
period. The intension of
the semi-structured interviews approach that was followed was
not an attempt to
establish consensus (large sample and time consuming
analysis); instead, the authors’
goal was to record the widest possible range of perspectives
(risks). In such a way,
respondents provided analytical answers to questions, in as
much detail as they wished,
in an open-ended discussion.

Effectively, the interviews also focused on extended open
discussion analysis (details
about respondents’ background, special interests in change and
risk management,
related case studies in terms of professional experience) in an
effort to grasp key
information and end up with a complete possible model.
Overall, interviews were proven
very helpful in coupling together not only professional
experience but also the personal
reflexion of the participants, increasing the validity of replies.
Figures 3 and 4 show
participant’s key information on differing industry backgrounds
and experience level.
Based on literature research, personal experience and interviews
61 attributes of
CRAM hierarchy tree were identified as shown in Figure 5.
The survey and detailed definitions of each Node Element in
terms of a Risk
Attribute’s Glossary can be found at: www.changemodel.net and
are not included in this
Table I.
CRAM’s node
hierarchy
Leve1 (root node) Level 2 (parent nodes) Level 3 (child nodes)
Change risk Leadership
Communication
Culture
Resistance

Requirements
Monitoring
Flexibility
Project management
team
Performance
Motivation
Appraisal
Rewards
Training
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http://www.changemodel.net
paper. In such a way, all respondents will share knowledge of
similar definitions of
terms and gain a common understanding.
Figure 5 shows an exhaustive extension of Table I where all 61
attributes of CRAM
hierarchy tree are depicted.
For risk attributes to be assessed numerically, a pair-wise
comparison method is
adopted. A detailed example can be found in the instructions of
the CRAM survey. One
major characteristic of CRAM’s risk survey is the rating scale.
This paper’s survey uses
AHP linear rating scale, as risk attributes are weighted by

integer numbers (1, 3, 5, 7 and
9) depending on the respondent’s preference as seen in Table II.
Johnson and Christensen (2008) explained that by using rating
scales, researchers
can obtain data by providing statements and corresponding
rating scales to
respondents. Usually, instructions are used to help respondents
make judgements. More
specifically, the numerical rating scale consists of set of
numbers and anchored (written
description for a point on a rating scale) end points.
In addition to the rating scale, the phrasing of the questions is
important, as it must
reflect the proper relationship between the elements in one level
with the property on the
next higher level (Saaty, 2008). When using AHP, special care
should be taken on the
formation of the questions, as by asking the wrong questions,
nonsensical feedback may
be obtained which could lead to decreased accuracy of results.
In general, questions should be phrased so that preferences
elicited from responses
can be easily ranked in order of importance. In the survey,
respondents are asked to rank
and qualify risk attributes with respect to a specific element in
the immediately higher
level of the hierarchy. For example:
Figure 3.
Respondents’
framework
knowledge/use

Figure 4.
Respondents’
background
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Figure 5.
Change risk
hierarchy tree
Table II.
Saaty’s linear scale
Intensity Definition Explanation
1 Equal importance The two activities contribute equally
3 Moderate importance Slightly favours one over another
5 Essential or strong importance Strongly favours one over
another
7 Demonstrated importance Dominance of the demonstrated
importance in
practice
9 Extreme importance Evidence favouring one over another of
highest possible order of affirmation
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Q7. For “Communication” attribute, which is more important,
being trustful or
having common vocabulary?
The Saaty’s scale described by equation (2) below is linear and
represents the relative
importance of one element over another with respect to
attributes:
c � x, x � �1, 3, 5, 7, 9� (2)
Furthermore, the approach attempts to develop a novel
systematic methodology (model)
for assigning probabilities in attributes (criteria) by pair-wise
comparison and, more
specifically, modelling and assessing change management risks,
adding a different
perspective and technique to the research area.
Risk estimates of a given change provide essential information
in deciding whether
to accept the change and in specifying the range of risks and
implications that this
change will introduce. Project managers implement and monitor
change with a view to
success, even though the majority of actions are governed by
time, cost and quality.
Consequently, they describe the processes to be followed in a
very detailed way,
nevertheless, processes can be further extended when analysing
the risk introduced by

changes.
4.1 Change risk assessment model’s validity of results
This section describes the validity of results based on AHP. To
evaluate the validity of
the estimated weights, Saaty (1980, 1983) proposed using
eigenvector information
which is considered to be a theoretically and practically proven
method for evaluating
the validity of the weights (Golden et al., 1989). This involves
the calculation of a list of
related weights of the chosen initial factors which are, in turn,
relevant to the problem in
question.
In summary, the algorithm implementing the AHP method, and
the way factors are
prioritised is summarised below:
(1) Calculate the maximum eigenvalue, �max, of the pair-wise
comparison matrix A.
This is defined as:
�max � Sum of Priority Row (3)
where
Priority Row � (sum of the row value) � Priority Vector.
(2) Compute the consistency index (CI) defined by Saaty as:
C.I �
�max � n
n � 1
(4)

The weights (w1, […], wn), obtained by using the eigenvectors,
should be positive and
normalised; in effect they should satisfy the reciprocity
property.
Provided that there is no absolute consistency, �max � n. To
define the level of
inconsistency, Saaty defined the consistency ratio (CR).
(3) Calculate the CR
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CR �
CI
RI
(5)
where the random index (RI) for different n can be obtained
from Golden et al. (1989)
(Table III).
RI is the average of CI for random matrices using the Saaty
scale. More precisely, the
above table represents a composite of two different experiments
performed by Saaty
and his colleagues at the Oak Ridge National Laboratory and at
the Wharton School of
the University of Pennsylvania. In these experiments, 500
random reciprocal [n � n]

matrices were generated for n � 3 to n � 15 using the 1 to 9
scale. CR normalised value
is divided by the arithmetic mean of random consistency
indexes (RI).
After many of experiments Alonso and Lamata (2006) were led
to the following
calculation of CR, which is also the equation used in our
research paper:
CR �
�max � n
2.7699n � 4.3513 � n
(6)
The maximum eigenvalue, based on Saaty, can be determined by
raising each random
matrix to increasing integer powers and normalising the result
until the process is
converged. The consistency index was then computed on each
matrix for n � 1 through
n � 15. As a rule of thumb, a value of C.R. < 0.1 is typically
considered acceptable.
In other words, inconsistency is permitted in AHP as long as it
does not exceed the
ratio of 0.1. If CR equals 0, then this means that the judgments
are perfectly consistent.
To give a simple numerical example, and based on the formulae
described above,
suppose four criteria have to compared.
The numerical values in Table IV and based on Saaty’s linear
scale (Table II)

represent the relative importance between the criteria. For
example, the relative
importance of “criterion 1” versus “criterion 3” is 3 and
between “criterion 3” and
“criterion 1” is 1/3. This indicates that criterion 1 is moderately
important (Table II)
compared to Criterion 3. The numbers in the weights column
show the relative weights
of the corresponding criteria. Following the steps described in
Section 4.1, the
eigenvalue � � 4.117 and CR � 4.3 per cent are calculated.
Detailed CRAM case study
results are listed in Tables V-VII, which indicate consistent
results in terms of
eigenvalues �max and CR.
Table III.
Random CI table
n 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Random index (RI) 0 0 0.58 0.90 1.12 1.24 1.32 1.41 1.45 1.49
1.51 1.48 1.56 1.57 1.59
Table IV.
An example of pair-
wise comparison
matrix and weights
Criterion 1 Criterion 2 Criterion 3 Criterion 4 Weights Ranking
Criterion 1 1 2 3 5 0.4709 1
Criterion 2 1/2 1 2 3 0.2672 2
Criterion 3 1/3 1/2 1 4 0.1880 3
Criterion 4 1/5 1/3 1/4 1 0.0739 4

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Organisational
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Table V.
Consolidated change
risk assessment
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Table VI.
Likelihood of change
risk (Parent nodes)
Factors Likelihood Attributes Likelihood
Leadership
� � 7.737
CR � 9.2 %
0.28 Active 0.235
Experienced 0.081
Strong 0.034
C-level engagement 0.092
Authority 0.277
Firm but Fair 0.036
Strategic 0.245
Communication
� � 7.695
CR � 8.7 %
0.243 Effective 0.115
Trustful 0.104
Involvement 0.21
Supportive 0.123
Common Vocabulary 0.04
Knowledge sharing 0.24
Conflict Management 0.167
Culture
� � 5.338
CR � 7.5 %

0.143 Integration 0.17
Leadership 0.379
Communication 0.317
Corporate values 0.086
Rewards Innovative 0.048
Resistance
� � 6.629
CR � 10 %
0.034 Empathy 0.034
Denial 0.096
Status Quo 0.191
Considerations of Skills and Resources 0.055
Lack of Training 0.421
Competition 0.203
Requirements
� � 7.649
CR � 8.1 %
0.051 Specific 0.123
Conform to customers expectations 0.12
Measurable 0.036
Attainable 0.107
Reliable 0.07
Traceable 0.338
Validation 0.206
Monitoring
� � 3.018
CR � 1.9 %
0.045 Reporting 0.238
Improve from lessons learned 0.136
Systematic 0.625

Flexibility
� � 5.263
CR � 5.8 %
0.057 Snr. Management Buy-in 0.28
Past Experience 0.325
Complexity 0.089
Quick and effective 0.059
Customisation 0.246
Project management team
� � 5.387
CR � 8.6 %
0.148 Performance 0.072
Motivation 0.369
Appraisal 0.275
Rewards 0.164
Training 0.121
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Organisational
decision
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4.2 Case study overview
“RingTokk Systems” (www.ringtokk.com) registered in UAE in
2012 is where leading
Telecommunication carriers, Cable companies, internet service
providers (ISP’s),
Original Equipment Manufacturers’s, Original Device
Manufacturer’s and Enterprises

join innovations to provide the widest choice of independent
soft phone solutions.
“RingTokk Systems” integrates voice, data, video into the most
compelling, innovative
and leading edge technologies to offer creative soft phone
solutions available on the
market today.
RingTokk had severe problems entering the market and beating
competition.
Overall, the mission and vision messages of the company were
not clear enough, and the
company was facing problems mainly in operations and project
planning. It was
mutually agreed with Ringtokk’s CEO, that the utilisation of
CRAM’s targeted analysis
of results and recommendations will be considered and handled
as a project. Moreover,
it was decided and agreed that CRAM will be used for the
“RingTokk” case study
without any changes in the prototype’s attributes, as it was not
necessary to identify
new attributes or omit any existing ones.
Prior to deploying CRAM, and after the kick-off discussions
with the executives’
board, it became obvious that communications in a multicultural
business environment
together with the increasing rate or technical unsolved
requirements were two identified
risks with the highest impact. Something had to change
drastically, as it is vital for
every organisation to enter the market with the minimum entry
barriers.
However, it is also imperative for stakeholders to keep risk

exposure at a minimum.
In other words, to identify and control known risks the soonest
possible and be able to
locate in a timely manner, the root cause should a risk
materialise. As far as changes are
Table VII.
Likelihood of change
risk project
management team
(Child nodes)
Factors Likelihood Attributes Likelihood Attributes Likelihood
Project management
team
� � 5.387
CR � 8.6 %
0.148 Performance 0.072 Audit and verify 0.16
� � 5.329 Planning outcomes 0.30
CR � 7.3% Benchmarking 0.077
Review on agreed standards 0.05
Clear targets 0.413
Motivation 0.369 Financial benefits 0.508
� � 4.198 Innovation 0.151
CR � 7.3 % Fear of punishment 0.075
Skillset improvement 0.265
Appraisal 0.275 Feedback 0.081
� � 3.065 Achievement of objectives 0.731
CR � 6.8 % Opportunity 0.188
Rewards 0.164 Realistic and clear 0.333
� � 3.025 Behaviour 0.57

CR � 2.6 % Recognition 0.097
Training 0.121 Networking 0.287
� � 6.614 Experience (Trainee) 0.271
CR � 9.8 % Learning and development 0.061
Experience (Trainer) 0.038
Value added 0.25
Tailor made 0.093
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http://www.ringtokk.com
concerned, frequent and uncontrolled changes for example in
project plans, company
policies, technical requirements and procedures affect severely
the key business
operations of an organisation.
Leadership, authority, conflicts and deliverables’ delays were
issues that the board
had to resolve. Effectively, to find the root cause of the
problems “RingTokk” was
facing, many business issues which had to be changed and
decided upon. CRAM was
deployed in an effort to elicit and provide business
recommendations concerning
organisational change risks, results of which are discussed in
Section 5.
5. Discussion and analysis
Further to the above analysis in terms of the methodology used,

Section 5 discusses
the results of “RingTokk” respondents’. The 12 Ringtokk
executives who
participated in the risk analysis process were from various
departments such as the
Directors’ board, marketing, legal, technical, strategy,
procurement and human
resources departments. For the analysis of the consolidated
results, the weighted
geometric mean of replies is used, due to its higher accuracy
than the respective
arithmetic mean.
The consolidated results decision matrix [c] combines all k
participants’ inputs to get
the aggregated group result. The weighted geometric mean of
the decision matrices
elements aij(k) using the individual decision maker’s weight wk
is described by equation
(7) below:
cij � exp
�
k�1
N
wk ln aij( k )
�
k�1
N
wk

(7)
Table V shows the consolidated matrix results, in greater detail.
Due to the fact that the research’s results are extensive, it is the
authors’ intention to
provide comments on the majority of the parent nodes (risk
factors). Complete
recommendations were reported and discussed extensively with
the RingTokk’s CEO.
The respondents’ results (top four) influential change risk
factors based on CRAM
ranking are as follows:
(1) leadership (27.99 per cent);
(2) communication (24.28 per cent);
(3) PMT (14.79 per cent); and
(4) culture (14.32 per cent).
The risk analysis presented in the following paragraphs goes a
step further from the
conventional approach of project management in terms of time,
budget and quality
constraints. It is concluded that leadership, communication,
project management team
and culture are the most important change risk factors. Prior to
further discussion and
analysis, it has to be noted that results are within the limits of
consistency (CR � 10 per
cent) which is prerequisite for AHP validity using Saaty’s linear
scale.
711
Organisational
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making
5.1 Leadership parent node
Although risk and uncertainty affect all projects, leadership is
the key factor for success.
For successful project management, one of the roles that the
project manager has to play
is that of the leader. The project manager serves as the “glue”
between the project and
the team members, ensuring that stakeholders remain focused on
the project goals. In
relation to change management, the project manager acting as
leader has to make sure
that team members understand and respond to the change
management processes. In
terms of change management, the project manager is the one
with the authority to
approve changes based on what is included in the projects’
scope. In effect, the project
manager can handle the change requests accordingly, by
analysing the impact the
changes will have on the project plan or the requirements.
Change leaders can help stakeholders by encouragement and
focus on change. Their
active involvement is dynamic; learning is based on the initial
recognition that there is
a problem, followed by exploring possible solutions and,
finally, providing helpful
directions. Consequently, learning is the best route to lower
resistance to changes.
Concerning the RingTokk project, it was rather obvious that the
lack of a long-term and
clear strategy was causing additional problems to the operation

of the company. Even
though each department head, had the authority to engage
people to work together,
conflict at lower levels of the hierarchy was something that had
to be addressed.
With reference to CRAM, “Leadership” as a risk factor was
ranked as the most
influential with 27.99 per cent. Moreover, related attributes
with high influence were
assessed authority (27.7 per cent), strategic (24.5 per cent) and
active (23.5 per cent).
Actually, APM® (2012) linked authority with influence. This is
because success is
related in turn with acceptance, support and agreement to the
influencer’s proposals or
objectives. Successful influencing is related with understanding
groups or individuals
pattern of attitude, behaviour, emotion and decision making. “A
pragmatic project
manager must balance the theories of leadership with the
practical need to deliver the
project objectives and the limits on their authority to lead”
(APM®, 2012, p. 69).
5.2 Communication parent node
Results revealed that the three most important risk factors
which have to be controlled
and perhaps changed in order for the project to be successful
are: knowledge sharing (24
per cent), involvement (21 per cent) and conflict management
(16.7 per cent). Regarding
knowledge sharing, Dingyong et al. (2009) examined the
differences between R&D
enterprises and other organisations, reaching the conclusion that
a knowledge sharing

culture by using documents, templates or that, in general shared
information systems is
necessary.
APM® (2012) explained that various factors exist which affect
the effectiveness of
communications, such as cultural background and transient
features, current
environment and team dynamics. Indeed, in the RingTokk case
study, the cultural
background together with the professional background mix was
conflicting and
problematic.
Further to the results, as far as change management is
concerned, the high
importance of communication was pointed out by Baca (2005);
Heldman (2005); Mulcahy
(2013), by stressing that communication is 90 per cent of the
project’s manager job.
Moreover, Heldman (2005) argued that risk management and
project management are
both iterative processes which position communication at its
core.
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712
As far as “Communication” is concerned, another key issue is
the language, which
needs to be understandable by all stakeholders and convey the
communicators’ message

as accurately as possible (APM®, 2012; Robertson and
Robertson, 2008). For example,
Ringtokk was facing severe problems in cross-department
communication. Most of the
problems were recorded between technical and marketing
departments. Moreover, the
Human Resources department did not clearly document the job
descriptions of business
analysts, engineers, designers, suppliers, testers or anyone
whose input is necessary.
Irrespective of the fact that all the above named professionals
have different skills, they
also have different views of what is important to communicate
or share. Nevertheless,
common vocabulary was ranked as the last attribute with 4 per
cent for which particular
note has to be taken to ensure a common understating of
terminology is present within
Ringtokk. In fact, Corvellec (2009) explored organisational risk
management in a context
where risk is absent from managerial vocabulary or
organisational communication.
Another process that concerns communication is stakeholder
management. Within
this frame, PRINCE2® (2013, p. 41) defines stakeholder
engagement (involvement) as
“the process of identifying and communicating effectively with
those people or groups
who have an interest or influence on the project’s outcome”.
The communication process
can be managed by the communication management strategy, as
the frequency of
communication among stakeholders is controlled and monitored.
In greater detail, the
“Plans” theme facilitates the communication control and

addresses questions such as,
for example, where, how, by whom, when and how much.
Taking CRAM’s results into
account, involvement was ranked as second risk attribute with
21 per cent.
Nonetheless, as organisations become larger and more complex,
the need for a
structured project management methodology arises. At the same
time, complexity
might mean more management layers that have to be addressed
properly.
Consequently, this may lead to additional communication
linkages. PMBOK® (2013,
p. 292) explains that “the total number of potential
communication channels (CC)” is
given by equation eight, where n represents the number of
stakeholders. For example, if
the stakeholders are eight then, the potential communication
channels are 28. In general:
CC � n(n � 1)/2 (8)
Among other success factors, PMBOK® (2013) explains that
project management
success depends highly on an effective organisational
communication style. Sharing
these opinions, Burns and Stalker (1961) explained that this
happens because project
teams are composed of members with diverse backgrounds
(skills, experience, attitudes
and culture) which work together. Even if project managers are
at distant locations
(which is also true for RingTokk), technology allows them to
manage projects
successfully.

Nevertheless, managing projects remotely can be associated
with complex risks. In
view of this, conflict cannot be avoided; however, the project
manager has to handle
disagreements and solve problems taking into account project
success (Mulcahy, 2013;
APM®, 2012; Gobeli et al., 1998).
Conflict (16.7 per cent) is also related to communication style
being direct or indirect.
Usually, conflicts occur when the project manager follows a
boss–subordinate
relationship: “I order and you follow”. True leaders aim to say
what they mean in an
open and constructive way listening to opinions of others. This
was another issue which
713
Organisational
decision
making
was heavily recorded. Although RingTokk’s high level
management was trying to be
supportive towards lower level employees, information was not
shared properly.
Ringtokk’s culture did impact the speed of working, the
decision-making process and
the impulse to act without appropriate planning. This led to
employee conflict and
stress, thereby affecting the business performance. As a result,
conflict should be

resolved in early stages of the project because it strongly affects
the collaborative work
among team members and can lead to uncontrolled situations.
5.3 Culture parent node
The cultural factor is evident in culturally diverse multinational
business environments,
where different ways of thinking and behaving sometimes
contradict and at other times
reinforce successful adaptation. Even though it is difficult to
define as it differs among
organisations or individuals, Kroeber and Kluckhohn (1985)
indicated that there are
more than 160 different definitions of culture.
The most common definition for organisational culture is “the
way we do things
here” (Lundy and Cowling, 1996). In most definitions, it is
related to characteristics and
assumptions of the organisation such as behaviour, values,
norms and rules. Robbins
(1996) argued that organisational culture forms an integral part
of organisational
functioning. RingTokk being a worldwide services provider had
to adopt international
practices of doing business. This was very hard to achieve
taking into account the
diversity of employees’ location; 65 per cent of RingTokk’s
employees are based in India
(mainly software engineers/testers).
The results obtained with reference to the culture’s attributes
are in total agreement
with Level 1 results. In fact, the top three risk factors rank as
follows:

• Leadership (37.9 per cent);
• Communication (31.7 per cent);
• Integration (17 per cent).
If the culture is strong, the values are shared and everybody is
aligned. It offers a
shared system of meanings, forming the basis of communication
and formal
understanding (Furnham and Gunter, 1993). In some other
cases, what might
influence behaviour is whether managers have the right tools,
filling the gap
between what is formally announced and what actually takes
place (Martin, 1992).
Douglas et al. (2013) argued that modern risk management
practices stress the
importance of connecting risk management policy and practices
with organisational
culture and values.
Discussing about business environment, Senge (1990) argued
that organisational
culture, which has a base of commitment to truth, empowers
individuals to reflect on
their actions, see if these actions can cause problems, recognise
the need for change(s)
and perceive their own roles in the change process.
Especially in project management, problems might occur
because the culture of
the stakeholders differs in a variety of ways. They might have
their own individual
culture of work which comes in conflict with others (Ruuska,
1999). Effectively,
project culture must consist of a shared organisational culture
and professional

culture of individuals. Sometimes for the organisational culture
to change, it is
required to rebuild the existing cultural assumptions into the
organisational
structure. In light of this, Belassi et al. (2007) associated
constructive work
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environment with strong leadership and new product
development project success.
Effectively, organisations that enforce strong communication
channels among
project team members and foresee for effective collaboration
are expected to have
better performance and project success.
However, in many cases, organisational changes are linked to
organisational culture.
Schein (1985) expressed the view that the implementation of
project management is seen
as a cultural change rather than a process change. Finally,
organisational culture, even
though it is a powerful force, is also resistant to change.
5.4 Project management team
Projects are managed by different teams of people which have
as common goal project
success. The PMT has in turn different characteristic such as
culture, experience and
management level that have to be combined together so as to

ensure that the projects’
deliverables conform to customer requirements and
expectations.
In this light, Senge (1990) explained that the most effective
project management
processes are those whose team members facilitate innovation
and learning as much as
possible. Provided that the team works in a spirit of
empowerment, this can be overall
assistive in fostering greater motivation, thus leading to project
success (Peterson,
2007). Moreover, the project team has an important role in the
planning phase related to
requirements, risk review and quality plans.
Either way, a project cannot run without team members; to
stress this, Baca (2005,
p. 19) pointed out that team members “are the magic makers
who spin straw into gold
and create the product”. Even though the PMT factor was
ranked with a likelihood of
14.8 per cent, the importance of a strong and dedicated team is
unquestionable. Taking
a closer look at the respective attributes, the most important
ones are motivation (36.9
per cent), appraisal (27.5 per cent) and rewards (16.4 per cent).
To execute a project and attempt to lead it successfully,
conforming to project’s
requirements and realising an expected outcome, whether
embedding or not change, a
PMT is required. Nelson (1996) argued that “Expectations are
like land mines. If you
aren’t clear about them, they can explode at the worst possible
moment and destroy the

trust you have worked so hard to develop”.
Managers should be prepared for two types of change, change
planned (30 per cent of
performance attribute) and change imposed (Evans and Ward,
2004). Especially new
managers experience certain pressure because they wish to make
a good impression and
effectively implement change correctly. On the other hand, if
they force the change
process, they may face resistance from other stakeholders.
White and Fortune (2002) prepared a questionnaire so as to
examine the experience of
people in project management. In their study, special focus was
given to performance
(7.2 per cent of PMT risk factor) as a success factor for
managing projects. In a similar
study, Chen and Cian (2010) measured the performance of
project management by
defining six factors which have the greatest impact on the
execution phase of the
projects. These were financial constraints, management
commitment, rewards system,
organisational structure, education and training of project team.
Hashmi et al. (2010) studied the growth of PMTs specifically
for software
development projects in terms of expertise, communication
skills, working conditions
and financial impact. Kerzner (2000) explained that four basic
values of project
management are cooperation, teamwork, trust and effective
communication. More
715

Organisational
decision
making
specifically, the PMT is “an integrated and multifunctional
entity to deliver the specified
project product” (Kliem et al., 1997).
Prior to the CRAM results’ analysis, RingTokk was not using
any specific project
management framework. Many department heads were actually
the project managers
of their department. As it will also be seen in the conclusions
section, RingTokk’s CEO
decided to formally engage with contemporary project
management frameworks and
related process for the operational benefit of the company.
6. Research limitations
One of this research aim is to identify risk factors that apply
across business domains.
As projects can be different in a variety of factors (quality,
scope), an exhaustive list of
risk factors cannot be identified. There is a continuous risk
identification process
throughout the projects’ life cycle. For example, many risks can
be classified initially as
unknown and can be refined after the initiation phase of the
project.
Another constraint regards the questionnaire which may lead to
bias, as the
respondents might have differences in terms of business sector,

mix of experience,
culture, etc. With the aid of the glossary provided, all
respondents had a common
understanding of what is requested to be assessed.
Concerning the adopted format of semi-structured interviews
(interviews were not
pre-planned with closed ended questions), the process resulted
to a greater bias than
respective structured ones (uniform, accurate and more precise).
The authors have been involved with change and risk
management in a number of
international projects. It was attempted to ensure that any
possible bias arising from
this involvement was kept to a minimum, as far as this was
possible.
7. Conclusions and future work
With the aid of modelling and especially CRAM, business
change risks can be assessed
numerically and are prioritised. Several risk factors and related
attributes were
identified and categorised. This empowers project managers or
other stakeholders to
make proper decisions about whether to take on or abandon
respective organisational or
project changes.
AHP is an established and structured hierarchical technique in
making complex
decisions that help users choose the “best” decision in a
challenging situation, instead of
finding the “correct” one. AHP mainly deals with decision-
making problems by
determining the relative importance or weight criteria though

pair-wise comparison of
the criteria.
Case study results indicated that RingTokk was facing key
operational problems
mainly in the areas of leadership, communication and culture.
The company has a
strong international presence with company offices located in
various countries,
from UAE to India. These two centres end points may function
well as standalone
entities, but problems may arise when intercommunicating,
mainly due to cultural
reasons.
Even though, the recommendations report submitted to
RingTokk’s CEO was
confidential, key actions were decided. The company’s revised
mission and vision was
presented to all employees to promote the new operational
business era. A cultural
training program promoting the key messages, goals and aims of
the company will be a
prerequisite for every new employee joining the company.
Concerning requirements
JM2
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716
analysis and project deliverables, it was agreed that the
company will follow an
established project management framework. For this reason, the

HR manager recruited
one dedicated project manager in India and one in UAE. In this
way, all operational and
planning goals will be monitored closely and requirements will
be recorded; any
changes will have to be approved by the department’s head. In
the marketing field, the
company will take part in several international exhibitions as a
sponsor, so as to
advertise its products more efficiently and increase brand
awareness.
In December 2013, RingTokk’s CEO announced the company’s
key business figures,
after two years of operation. Based on his speech:
[…] RingTokk has gone under severe organisational changes,
results of which I’m more that
proud and I wish to express my gratitude to all of you. The
accomplishments are impressive
but there’s still a lot to do. The customer base was increased by
28 per cent and operations
efficiency was improved by 16 per cent, overall our net profit
was increased by 4.3 per cent […].
Further to the RingTokk case study, change risk management
was thoroughly
discussed as an integrated process within project management
and as a rational process
for exploring decision and behaviour alternatives; selecting the
best possible choices
among stakeholders in an attempt to accomplish activities in
time, on budget, within
scope and agreed quality standards ensures project success.
Effectively, one of the best ways to integrate change risk

management into successful
project management requirements analysis processes is to
encourage people to work
together in solving business problems and achieving results.
However, for projects to be
successful, and even though communication may be based on
vocabulary discrepancies,
all stakeholders have to formulate a solution to model the
customers’ requirements and
conform to what is being expected.
One of the values of CRAM is that it can be deemed as a global
change risk
assessment method that can be applied regardless of project
type, size or organisation.
Moreover, it has the advantage that it can be used by any
project, as the method is
designed to be tailored to specific needs, taking significant
environmental change risk
factors into account.
As not all projects are the same, and also not all risks can be
identified,
CRAM provides the user with flexibility and capability to add
or delete risk
attributes accordingly, on a per case basis. In other words,
CRAM is a fully dynamic
model that can be changed on-demand and can become
applicable to various
business domains.
Ultimately, it is the authors’ belief that future research efforts
will focus on the
assessment of risks with various other qualitative/quantitative
techniques as noted in
Section 3. In addition, CRAM outcomes are characterised by

environmental factors and
attributes which can form the basis of an environment-feature-
driven model
composition. A framework capable of transforming such a
business process model layer
to subsequent models of lower abstraction would require a
pioneer approach to
model-driven initiatives.
Whether such framework can reside in the logic behind the
Model Driven Business
Engineering framework is currently under investigation. The
outcome could be a more
attractive solution to model-driven initiatives for corporate
entities providing an insight
to CRAM and model based engineering.
717
Organisational
decision
making
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profession.ashx
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mailto:[email protected]
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Facilitating organisational decision making: a change risk
assessment model case study1. Introduction2. Literature
review3. Defining the change risk assessment model4.
Methodology5. Discussion and analysis6. Research limitations7.
Conclusions and future workReferences
International Journal of Global Business, 7 (1), 77-94, June
2014 77

Building Global Strategic Alliances and Coalitions for Foreign
Investment Opportunities
Dr. Balarabe A. Jakada
Department of Business Administration and Entrepreneurship
Bayero University, Kano, Nigeria.
[email protected]
Abstract
Global strategic alliance and coalition is a diffuse way of
effective combination of strengths of
companies aiming at entering new markets, exploring new
technologies, bypassing government
entry restrictions and to learn quickly from the leading firm in
the partnership, all in an effort to
exploit foreign investment opportunities. Strategic alliances are
however, not easy to develop and
support. They often fail because of technical errors made by
management of member firms. To
make it a success, a strong and efficient alliance agreement has
to be in place to enable companies
to gain in markets that would otherwise be uneconomical.

Building alliances requires considerable
time and energy from all parties involved with a detailed plan,
expectations, limitations and scopes,
and the likely benefits drivable from the project. Alliances take
a number of forms and go by
various labels. Alliances may be contracts, limited partnerships,
general partnerships, or corporate
joint ventures, or may take less formal forms, such as a referral
network. The paper is aimed at
exploring and educating prospective and allied businesses or
firms the need and significance of
across border coalition, and how to go about it. It is a literature
based paper and therefore, reviews
related literatures from journal articles, texts, seminar papers
and some online sources for better
understanding of the concept. The paper looked into issues in
building global strategic alliances
and coalitions, developing a global strategy, why the formation
of alliances, issues in selecting
alliances partners, stages involved, and benefits drivable from
such partnership. It further
highlights the conceivable types of strategic alliance and
sighted examples of real life alliances. It
was found that global alliances had helped big firms explore

new international markets and new
technological competencies. Thus the paper recommends that a
firm, who really wants to have a
global touch, would have to start through alliances or coalition.
2014 78
Key words: Strategic alliance, Globalization, Strategy,
Coalition, Foreign Direct Investment
Introduction
Change is an ever present facet of business development.
Businesses transfer ownership, for
example, and end up reformulating their entire business
structures. Companies hire outside
consultants to advise restructuring during financial crises.
Sometimes the fact that businesses go
global is the product of the inevitable ebb and flow of
commerce. An overseas buyer may transfer
operations to the home country. The majority of an industry's
business may shift overseas, making

global expansion all the more desirable. Competition may
develop in regions or countries such
that it is unwise for a company not to follow.
Companies go international for a variety of reasons but the
typical goal is company growth or
expansion. When a company hires international employees or
searches for new markets abroad,
an international strategy can help diversify and expand the
business. Economic globalization is the
process during which businesses rapidly expand their markets to
include global clients. Such
expansion is possible in part because technological
breakthroughs throughout the 20th century
rendered global communication easier. Air travel and email
networks mean it is possible to manage
a business from a remote location. Now businesses often have
the option of going global, they
assess a range of considerations before beginning such
expansion.
During the last half of the twentieth century, many barriers to
international trade fell and a wave
of firms began pursuing global strategies to gain a competitive
advantage. However, some
industries benefited more from globalization than do others, and

some nations have a comparative
advantage over other nations in certain industries when it comes
to foreign investments. According
to Hornberger (2011) there are promising trends in global
Foreign Direct Investment (FDI) flows
for developing and transition economies”. Each year more and
more FDI is flowing not only from
developed into developing economies but also from one
developing or transition economy to
another. UNCTAD (2009: 17) notably, since the mid-1980s,
most developing countries have
become much more open to FDI, with a view to benefiting from
the development contributions
which FDI (particularly high-quality FDI) can generate for host
countries. In the same vein,
Todeva & Knoke (2005) highlighted the possibility of both
firms and host countries reducing the
business risk of international operation, is by cooperation
among firms in the form of alliances and
coalition. In other words, corporations that have aligned their
business with others are seen to be
more efficient and effective on the international business scene
(Todeva & Knoke, 2005).
With growth and development in sight, developing countries

seek to make regulatory work for
FDI more transparent, stable, predictable, secure and thereby
more attractive for foreign investors
(LJNCTAD 2003). Again this style of partnership trading
should be replaced with strategic
alliances and mergers if developing countries have a chance of
developing through the assistance
2014 79
of the developed nations in the 21st century (Kinyeki and
Mwangi, 2013). This is a critical issue
of economic development for the developing nations.
As this paper integrates three different issues that are pertinent
in International Business, each of
them will be closely examined to have a better linkage on their
interdependence. Objectively, this
paper seeks to explore every available opportunity in building a
global strategic alliance or
coalition in exploring international business opportunities, how
multinationals align, why they
align, stages involved and importantly strategize while doing

business globally.
The Concept of Globalization and Foreign investment
Globalization is an ongoing process by which regional
economies, societies and cultures have
become integrated. The term is used to describe the fact that the
world becomes a global village
and that trade, production and finance are being conducted on a
globe of scale. Economic
globalization is the process during which businesses rapidly
expand their markets to include global
clients. Such expansion is possible in part because technological
breakthroughs throughout the
20th century rendered global communication easier. Air travel
and email networks mean it is
possible to manage a business from a remote location. Now
businesses often have the option of
going global, they assess a range of considerations before
beginning such expansion.
Foreign direct investment (FDI) is but an investment made by a
company (parent company) into a
foreign company. Making an argument for why foreign direct
investment plays an extra ordinary
and growing role in global business. Graham and Spaulding

(2005) says “foreign direct investment
in its classic definition, is defined as a company from one
country making a physical investment
into building a factory in another country”. They further
maintained that “the sea change in trade
and investment policies and regulatory environment globally in
the past decade, including the
policy and tariff liberalization, easing of restrictions on foreign
investment and acquisition in many
nations, and the deregulation and privatization of many
industries, has probably been the most
significant catalyst for FDI’S expanded role in recent time”.
Building a Global Strategy
Today, we live in a global economy in which time taken for
people to move between continents
has been significantly reduced. The business response of large
business organisations has to
recognise that they now operate in a global market place and to
develop appropriate strategies.
Problems associated with global business management have
been identified as factors that
negatively impact the performance and productivity of
multinational corporations and in turn,

adversely affect regional and national economic growth. And
the new global reality that
organizations and their leaders face is a rapidly changing
international context. The intercultural
dynamics of increasing globalization demand strategic cultural
thinking and a global mindset that
sees beyond national borders and is open to exchanging new
ideas. Leaders of all organizations
2014 80
find themselves increasingly working in a fluid environment
requiring flexible thinking to adapt
quickly to new and different intercultural environments (Dean,
2006).
Organizations are facing increased global competition,
economic uncertainties, and changing
markets. Technology is changing the way we conduct business
and manage information.
Outsourcing of significant functions within businesses and
organizations complicates the
landscape of supplier relations. Suppliers and vendor partners
may be located in the same city,

region or country. But they are just as likely to be located
halfway around the world, adding new
challenges to business management.
Global strategy is considered to be an act of building a unique
and sustainable ways by which
organization create value, a broad formula for how business is
going to compete against another
business in the global market. Global strategy leads to a wide
variety of business strategies, and a
high level of adaptation to the local business environment. The
challenge here is to develop one
single strategy that can be applied throughout the world at the
same time maintaining the flexibility
to adapt that strategy to the local business environment when
necessary (Yip, 2002). A global
strategy involves a carefully crafted single strategy for the
entire network of subsidiaries and
partners, encompassing many countries simultaneously and
leveraging synergies across many
countries. The global strategy assumes that the centre should
standardize its operations and
products in all the different countries, unless there is a
compelling reason for not doing so (Zou

and Cavusgil, 2002). It is therefore important for the centre to
offer a significant coordination its
subsidiaries activities ranging from product standardization,
responsiveness to local business
environment and competition in the market.
Global Strategic Alliance and Coalition
Strategic alliances developed and propagated as formalized
inter-organizational relationships,
particularly among companies in international business systems.
These cooperative arrangements
seek to achieve organizational objectives better through
collaboration than through competition,
but alliances also generate problems at several levels of analysis
(Margarita, 2009). A strategic
alliance is a term used to describe a variety of cooperative
agreements between different firms,
such as shared research, formal joint ventures, or minority
equity participation (Campbell & Reuer
2001). Strategic alliance can be described as a process wherein
participants willingly modify their
basic business practices with a purpose to reduce duplication
and waste while facilitating improved
performance (Frankle, Whipple and Frayer, 1996). In simple
words, a strategic alliance is

sometimes just referred to as “partnership” that offers
businesses a chance to join forces for a
mutually beneficial opportunity and sustained competitive
advantage (Yi Wei, 2007).
According to Dean (2006) in an increasingly globalized
environment, organizations in different
nations can expand their reach and effectiveness by building
global partnerships, transnational
partnerships and international strategic alliances with other
organizations. The term global alliance
encompasses all of these. Dean (2006) explained that such
arrangements are especially useful
2014 81
where organizations are operating in highly fluid environments
of increasing informational
complexity and cultural diversity”. Relationships built on
mutual respect and trust hold significant
potential benefits, including increased confidence and security,
reduced transactional costs and
better information exchange and creative synergies generated by

cultural diversity. In the same
vein, the modern form of strategic alliance is becoming
increasingly popular and has three
distinguishing characteristics as described by Jagersma (2005);
they are usually between firms in
high - industrialized nations; the focus is often on creating new
products and technologies rather
than distributing existing ones; they are often only created for
short term durations. Technology
exchange is a major objective for many strategic alliances. The
reason for this is that technological
innovations are based on interdisciplinary advances and it is
difficult for a single firm to possess
the necessary resources or capabilities to conduct its own
effective R&D efforts. This is also
supported by shorter product life cycles and the need for many
companies to stay competitive
through innovation (Jagersma, 2005). Similarly Kotelnikov
(2010) defined it as strategic alliance
where two or more businesses join together for a set period of
time. The businesses, usually, are
not in direct competition, but have similar products or services
that are directed toward the same
target audience. He also mentioned that, strategic alliances

enable business to gain competitive
advantage through access to a partner’s resources, including
markets, technologies, capital and
people.
Literally, coalition or alliance can simply mean conjunction or
fusion between two or more
different phenomenon to form a unit, in most case for strategic
reasons. Hence, partners may
provide the strategic alliance with resources such as product,
distribution channels, manufacturing
capability, project funding, capital equipment, knowledge,
expertise or intellectual property. In
other words alliance is a cooperation or collaboration which
aims for a synergy where each partner
hopes that the benefit from alliance will be greater than those
from individual efforts.
While many analysts regard strategic alliances as recent
phenomena, inter-organizational linkages
have existed since the origins of the firm as a production unit.
Some examples include firm and
entrepreneur ties to credit institutions such as banks; to trade
associations such as the early Dutch
Guilds; and to suppliers of raw materials, such as family farms,
individual producers, and

craftsmen (Todeva & Knoke, 2005). Meanwhile, the concept of
coalitions has undergone differing
applications and meanings within organizational theory. The
earliest uses focus on conflicts within
organizations and the presence of multiple goals within the
same organization (Simon and March,
1958). They further emphasize that coalitions is between firms
but not within organizations.
Another significant period of coalition research centered on
James Thompson (1996), where he
coined the term “Dominant coalition”. Thompson (1996)
concluded there were certain constraints
on coalition building, mainly the organization’s technology and
environment. Thompson theorized
that the more uncertainty in organizations due to technology and
environment, the more power
bases that exist. The coalition grows as the uncertainty
increases. Thompson (1996) also used the
term, “inner circle” to describe the selected few within an
organization whose connections provide
them with influence. Their role in coalition building is often
one of leadership, but they seldom act

2014 82
alone in achieving goals. Thompson went further to say that.
“Their power is enhanced as the
coalition strives to achieve a group goal: thus, the individual
and coalition feed off each other”.
Carrying Thompson’s point one step further, interdependency in
an organization creates a greater
likelihood for the formation of a coalition or coalitions.
Generally, building alliance or coalition would go a long way in
assisting firms (particularly those
in strong alliance) gain more business advantage in their
respective dealings over other (especially,
individual organization without ally). Potential coalition
members must be persuaded that forming
a coalition would be to their benefit. To do this one needs to
demonstrate that your goals are similar
and compatible, that working together will enhance both
group’s abilities to reach their goals, and
that the benefits of coalescing will be greater than the costs
(Spranger, 2003). The third point can
be demonstrated in either of two ways: incentives can be
offered to make the benefits of joining

the coalition high or sanctions can be threatened, making the
costs of not joining even higher. For
example, the United States offered a variety of financial aid and
political benefits to countries that
joined its coalition against Iraq in 2003; it also threatened
negative repercussions for those who
failed to join, and much worse for those who sided with Saddam
Hussein. Another method that
can make joining the coalition appealing is to eliminate
alternatives to the coalition. Once most of
one’s allies or associates have joined a coalition, it is awkward,
perhaps dangerous not to join
oneself. Although people and organizations often prefer non-
action to making a risky decision. if
they find themselves choosing between getting on board a
growing coalition or being left behind,
getting on board is often more attractive.
Why form Global Alliance or Coalition
Many fast-growth technology companies use strategic alliances
to benefit from more-established
channels of distribution, marketing, or brand reputation of
bigger, better-known players. However,

more traditional businesses tend to enter alliances for reasons
such as geographic expansion, cost
reduction, manufacturing, and other supply-chain synergies
(Kinyeki and Mwangi, 2013). To
further support earlier view, Jacob and Weiss (2008) also
maintained that companies forms across
border alliances in order to get instant endorsement that would
add to the firm’s credibility thereby
gaining more customers at a lower marketing costs. To combine
partner resources to develop new
businesses or reduce investment is a vital reason why businesses
form alliances. Typical examples
include new business start-ups with parents contributing
specific complementary capabilities that
constitute the basis for a new business. For instance, Airbus was
a joint venture between French,
German, British and Spanish manufacturers that eventually
became a single company. Each
national partner has specialized in one bit of aircraft
manufacturing. The French became experts
in aircraft electronics and cockpit design, the British became
world leaders in wing manufacturing,
the Germans concentrated on making fuselages and the Spanish
focused on aircraft tails (Burdon,

Chelliah & Bhalla, 2009). Strategic alliance designed to respond
to competition and to reduce
uncertainty can also create competitive advantages. However,
these advantages tend to be more
2014 83
temporary those developed through complementary (both
vertical and horizontal) strategic
alliances (Belal & Akhter, 2011).
A high degree of integration of specific parent resources is
required to achieve goals and it is
desirable to create loyalty to a new business distinct from the
parents because their interests might
otherwise prevent the success of collaboration (Kale and Singh,
2009). Toshiba and Motorola, for
example, created a semiconductor manufacturing alliance, even
though the two parents competed
in downstream product areas. Direct parent-to-parent
collaboration (often including licensing or
long-term contractual agreements) is appropriate when assets or
resources are best kept in separate

parent organizations. Parent interests are competitive close
parent control is required, and success
cannot be measured in terms of performance measures that
apply to stand-alone businesses (for
instance, the main purpose is to learn). Learning may entail
improving skills through working with
a partner or gaining access to countries. Turner Broadcasting,
which is part of Time Warner, had
a deal with Philips, a Dutch electronics company, where Philips
got the right to name a new sports
arena that TBS built in Atlanta. But TBS’s main motive was to
find out more about European
consumers and about the digital communications hardware that
is Philips’s stock-in-trade (Burdon,
Chelliah & Bhalla, 2009). In the same vein Margarita (2009)
emphasizes that expertise and
knowledge can range from learning to deal with government
regulations, production knowledge,
or learning how to acquire resources.
To eliminate business risks is another reason why alliances are
formed. During the past few years,
Renault, General Motors and DaimlerChrysler have bought
stakes in Nissan, Fuji Heavy Industries
(which makes Subaru brand cars), and Mitsubishi Motors,

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