3.6 Flashcards
What are the 5 causes of business change
Change in business size, Poor performance, New ownership, transformational leadership, business restructuring
What is transformational leadership
In some cases change can only be brought about by a transformational leader with a new strategic direction and vision for the business
Extensive changes are likely to be made to the businesses aims, objectives, structure and culture
Possible effects of change on competitiveness
Change as a result of some internal factors (e.g. following poor performance or the arrival of a new leader) can be rapid and can lead to swift improvements in competitiveness
Change as a result of external factors is more likely to be gradual and involve a business carefully selecting and pursuing an appropriate long-term competitive strategy
Research suggests that change has an overall positive effect on business competitiveness when it brings management and engaged employees together and their efforts are coordinated
Possible effects of change, on productivity
In the short-term, as change is being implemented and employees get used to new processes, surroundings, leadership or a new product, productivity is likely to be reduced
Once changes are embedded, productivity is likely to return to earlier levels and possibly improve - especially if new technology is part of the change
During periods of external change businesses may endure a period of unstable levels of productivity and must take steps to manage capacity utilisation and unit costs
Possible effects of change on financial performance
In the short-term, the implementation of change can be very expensive for several reasons
Organisational restructure may involve significant redundancy payments as well as recruitment and training costs
Market research and product development require investment
Attracting transformational leadership to key roles will require attractive salaries to be offered
Public relations and promotional activity may be needed, especially where change is implemented a result of poor performance
New strategies are likely to involve capital expenditure
In the longer term, financial performance is likely to improve as change becomes the new way of working and teething problems are overcome
Possible effects of change on stakeholders
Change can have predictable as well as less obvious impacts on the range of stakeholders
Some changes such as seasonal fluctuations or cyclical economic factors can often be planned-for and their impacts on stakeholders considered in advance
E.g. increased orders for barbecue products are very likely to be placed during the warmer summer months which a supermarket will be able to liaise with suppliers ahead of time
A sudden ‘cold snap’, on the other hand, is likely to be difficult for many fashion retailers as they operate on a seasonal basis - customers may well be disappointed if they are unable to source warm clothing
Significant long-term change is likely to involve a wide range of stakeholders at some level
E.g. following its takeover by Frasers Group Plc, Debenhams stores were closed and the brand moved online
This had far-reaching impacts on Debenhams’ product range, organisational structure and supply chain
Thousands of employees were made redundant, rapid change made to the management structure, existing supply agreements were cancelled and new suppliers appointed
Local councils were faced with large empty premises in prominent high street locations, impacting on the retail environment in their towns as well as reducing income from business rates
What is a business continuity plan
A business continuity plan sets out how a business will operate following a serious incident or disaster and how it expects to return to normal as soon as possible
While the specific stages may vary depending on the businesses size and specific circumstances there are some common stages that are typically included in a business continuity plan
What is succession planning
Succession Planning
Succession planning involves identifying and developing current employees who have the potential to move into key roles in the future
It is often used to preparing for the eventual retirement death or departure of the a senior executive and ensure the smooth transition of the business to the next generation of leadership
While the process may vary depending on the specific circumstances of a business there are some key elements of succession planning
What is scenario planning
Scenario planning is the process of anticipating possible changes in a business’s situation and devising ways of dealing with them
This risk assessment is where a business identifies, evaluates and prioritises risks and the precautions that may be taken to protect against them
4 factors affecting business change
Organisational culture
Organisation size
Pace of change
Resistance to change
Why does organisational culture affect business change
Strong culture - employees willing to embrace it
Open culture - employees likely to be more informed of change
How being a large business affects change
Larger organisations usually have complex structures which can make change more difficult to implement
But, Larger businesses often have more resources available to support change initiatives such as financial resources, technology and experienced staff
How pace of change affects change
If the pace of change is too fast
It can create resistance from overwhelmed workers who feel unprepared and that they don’t have enough time to adjust
If the pace of change is too slow it can result in
A lack of adaptability and innovation
1 reason employees, owners, customers and suppliers may be resistant to change
Employees may worry about how the change will affect their job security or work environment
Owners may fear that changing their current processes may cause disruption to their daily operations and affect productivity
Customers may be hesitant to try something new or unfamiliar
Changing to something new can be uncomfortable or even intimidating
They may fear losing something they value
Suppliers may be reluctant to change their processes or systems
They may be worried that the change will lead to a decrease in quality or additional costs
