Although organizations in the past existed with the same aim as those today, organization's environment in which they operate today has changed dramatically. Globalization and shifts in technological development have led to the appearance of a turbulent business environment which imposes new trends and performance criteria. Although organizational changes have always been present, the number and kind of changes increased greatly in the past decades, imposing new challenges for successful management. While once managing change was an exception, today it has become the norm. Each organization, in their daily operations has to include strategic and active monitoring of the environment and change management in order to build sustainable competitive ability and long-term growth and survival. Given that organizational changes can and should be managed if the organization wants to be competitive, through this master thesis basic principles of organizational changes and change management are presented, as well as their impact on the overall organizational and individual performance. The thesis also indicates which factors lead to changes in organization and considers the phases of organizational growth, development and long-term survival, as well as their impact on building sustainable competitive ability of organizations. Only through active life cycle management, understanding needs and predicting potential problems, managers in a long term can ensure ease functioning and development of organizations. With proper change management and understanding the importance of organizational change in different phases of life cycle, organizations will build and maintain their competitive ability.