Change

Question 1

What are the 7 major causes in rapid change?

Answer 1

• Introduction of new technology
• Changes in competition
• Changing consumer tastes
• New legislation
• Labour market changes
• Changes in economic conditions
• Change in business ownership

Question 2

What are the internal causes of change?

Answer 2

1)Changes in management style
2)Changes in Business ownership
3)Changes in Business size
4)Introduction of new technology

Question 3

Changes in management style A01 (internal causes of change)

What is a key element in the process of change? + The introduction of what ? can bring significant changes?
-What might new leaders wish to do?
-What might staff be required to do?
-A decision to make a business more ‘…. ….’, for example, will require a whole new approach from all involed
-Internal changes in …. and …. are difficult to implement as …..?

Answer 3

-Leadership is a key element in the process of change and the introduction of new key decision makers can bring about significant changes to an organisation.
-New leaders may wish to implement new strategies which lead to a change in the culture of a business. A movement away from an authoritarian management style to a more laissezfaire approach will have a significant impact on all stakeholders and will undoubtedly require a new way of working.
-Staff may be encouraged to take on greater responsibility and offer new ideas which will benefit the organisation.
-A decision to make a business more ‘customer orientated’, for example, will require a whole new approach from all involved. Internal changes in style and culture are difficult to implement as workers naturally resist change. However the benefits can be significant in the long run.

Question 4

Changes in business ownership A01 (internal causes of change)

Answer 4

This type of change can cause major upheaval for a range of stakeholders. New owners often look for efficiencies and cost-cutting, to improve profitability. New management may wish to introduce a new ethos within the business, a new way of working. When two businesses merge, the dominant organisation may impose its culture upon the other and this is often met with resistance from those being required to adapt their way of working.

Question 5

Changes in business size A01 (internal causes of change)

Answer 5

Businesses can grow organically, carefully building on product ranges, investing in new technologies, developing distribution channels. Carefully managed organic growth prevents cash flow problems and limits risk. Rapid organic growth can also happen. This can put pressure on liquidity, debtor management, and staff. Staff will need to develop new skills and adapt to new roles. Often there is the need to bring in external investors to fund growth. This in itself changes management structure and responsibilities and likely business objectives.

Question 6

Introduction of new technology A01 (internal causes of change)

Answer 6

New technology can affect both the pattern of consumer demand and methods of production. For example, the growth of web-based applications puts pressure on Microsoft, forcing development of mobile and Internet-based software; online shopping has caused the failure of some large and established high-street retailers and the music industry is finding it difficult to adapt to the consumer practice of accessing music through mobile technology.

Question 7

What are the types of external causes of change?

Answer 7

1)Introduction of new technology
2)labour market
3)Changes in economic conditions
4)Competition
5)Changes in consumer tastes
6)New legislation

Question 8

Introduction of new technology A01 (EXTERNAL change)

Answer 8

Developments in new technology will force businesses to change. For example, the ability to shop online has caused all the major supermarkets in the UK to change their operations to meet customer demand. Those who were slow to change saw a reduction in market share and were forced to change in order to compete. Methods of production are constantly changing and the introduction of robotic technology in the car industry is deemed to be essential if quality and output are to be improved

Question 9

Labour market A01 (external change)

Answer 9

The minimum wage, the living wage, greater employment protection, increased maternity pay, etc. have all pushed up costs. A recession, on the other hand, will increase supply of labour so pushing down costs. Immigration policy and the expansion of EU membership has increased supply of migrant workers, keeping wages of unskilled workers lower than they would have been without the high levels of labour mobility. The decision to leave the EU may well impact on the nature of the UK labour market and this change will impact on different business in a variety of ways.

Question 10

Changes in economic conditions A01 (external change)

Answer 10

The cyclical nature of the UK economy naturally causes business to react to economic circumstances. For example, the low rates of inflation experienced in the UK economy in recent years have put pressure on businesses to cut costs and improve productivity if they are to remain competitive. Exchange rate fluctuations cause businesses to seek new markets or change to new suppliers as their profit margins become squeezed. This has been clearly illustrated by the weakening of the pound against the US dollar in the wake of the referendum to leave the EU which has impacted significantly on many UK businesses.

Question 11

Competition A01 (external change)

Answer 11

Existing competitors can change their strategy, or new competitors can enter the market place. For example, The growth of supermarket chains Aldi and Lidl has caused the major players in the market to change their pricing policies significantly in the light of the gains in market share that these competitors have achieved. The global marketplace has increasingly forced change upon UK businesses and will continue to do so at an ever increasing pace.

Question 12

Changes in consumer tastes A01 (external change)

Answer 12

Tastes can change abruptly, completely altering demand patterns. changing consumer tastes can create opportunities for businesses as well as presenting challenges.

Question 13

New legislations A01 (external change)

Answer 13

Governments can change legislation both to limit business activity and alternatively to free up activity. UK businesses constantly have to comply with new legislation and adapt their products and services accordingly. For example, Food labelling has changed out of all recognition as governments put pressure on food manufacturers to clearly state exactly what is contained in their products – this has caused a radical change in the industries’ approach to the way in which they place a greater emphasis on consumer health. Many UK businesses have complained about EU legislation that has caused their costs to rise significantly and it will be interesting to see if leaving the EU will have any impact in this sphere in the coming years.

Question 14

Planned change A01

Answer 14

Planned change is created internally and is structured and timetabled. Clear objectives for the change are established, timelines created and resources applied to creating the change. For example, a cycle manufacturer may
decide to offer a new range of electric bikes to launch in the next twelve months and will gear up its manufacturing and marketing campaigns accordingly.

Question 15

Unplanned change A01

Answer 15

Unplanned change occurs in response to a shock to the business and is often unstructured and under-resourced. A shock could be external (exogenous), such as introduction of new technology by competitors, or internal, such as a key worker suddenly leaving.

Question 16

Explain the effects of change

Answer 16

1) Shorter product life cycles.
2) Diminished brand loyalty.
3) New products need to be developed
4) Production methods will need to be changed to match changing customer demands
5) Retraining the workforce
6) Flexible workforce
7) The need to comply with constantly changing legislation

Question 17

Explain the effects of change: product life cycle

Answer 17

One major impact is that product life cycles have become shorter. This trend brings both threats and opportunities to retailers and manufacturers. With a shorter life cycle, products must pay a return immediately, there is little incentive for long term investment. Returns can be improved by seeking new markets for products.

Question 18

Explain the effects of change:
1) Diminished brand loyalty
2) New products need to be developed

Answer 18

1) New entrants into the market find it easier to grab market share, existing businesses have to fight harder to maintain sales. Marketing costs are increased, to maintain brands and to introduce new products.

2) Because goods are seen as more disposable and consumers are constant
ly looking for better quality products. A business needs to be aware of possible future consumer tastes and make sure they are prepared to respond to market changes.

Question 19

Explain the effects of change: Production methods will need to be changed to match changing customer demands

Answer 19

This will require spending on research and development and production technology. With new products needed continually, spending on new ideas, improving existing products and investing in improved productivity and quality must be funded. As a consequence capital goods are likely to become out of date much faster. This pressure on returns from large-scale capital investment encourages some businesses to contract out manufacturing.

Question 20

One of the most difficult tasks of leadership is encouraging and managing organisational change. To prepare for change and to be in a position to react effectively to change, managers need to put in place a number of key strate
gies. These are: ????

Effective Change Management A01

Answer 20

1) Employee preparation: The first stage in effective change management is preparing employees for change. This may involve reskilling to enable employees to carry out new tasks effectively. Such training will make a workforce more flexible and adaptable, enabling them to meet the demands of change. There may be need for recruitment so that the business has workers with new skills or managers who can force the pace of change.

2) Increased research and development (R & D) expenditure: Increased expenditure on R&D is used both in preparation for change, and as a reaction to change. This type of spending develops new products, new methods of production and new technologies.

3) Additional capital investment: Change can create the need for investment in new technology and new equipment. Change is often an expensive undertaking. For example, relocation can be very costly. If a business does not have access to sufficient finance, it is very unlikely that it will be able to implement effective change.

Question 21

Outline storey’s four methods of implementing change

Answer 21

1. Negotiated Total Package
2. Negotiated Piecemeal Initiatives
3. Imposed Piecemeal Initiatives
4. Imposed Total Package

Question 22

Storey’s four methods of implementing change
1) Negotiated Total package

Answer 22

Management and workers negotiate on how a major change in the way a business functions will be implemented. Therefore the change
implemented will be based on agreement between management and workers in all locations from which the business operates. Trade unions will be very much involved and increased rewards and improved conditions
are likely to be offered to the workforce. This is more likely to result in a coordinated process of change which is understood, and accepted,
by all stakeholders. This is likely to be the most effective method of undertaking a process of change but requires a good deal of preparation
and expenditure. In reality, this may not always be possible in a highly competitive and difficult business environment.

Question 23

Storey’s four methods of implementing change
2) Negotiated Piecemeal initiatives

Answer 23

Management and workers will consult and agree on various changes as they become necessary; for example, new shift patterns or productivity agreements. There is no overall agreement or coordinated process that is in
place for the negotiated total package. This method may be easier to implement than a total package of change, but can result in difficulties because of a lack of a complete system change. For example, a productivity
agreement negotiated in one location but not in others could cause resentment and conflict.

Question 24

Storey’s four methods of implementing change
3) Imposed piecemeal initiatives

Answer 24

Managers plan and implement changes such as a move to flexitime or the development of quality circles in order to solve particular problems. This saves time and the structure of change is in the hands of management
who understand the overall objectives of the business. However, the imposition of change can be met with resistance from workers who
may resent the lack of consultation. Each piecemeal change may also be aimed at a different objective, whereas a total package is more likely to be working towards one overall objective.

Question 25

Storey's four methods of implementing change 4) Imposed total package

Answer 25

Senior management plan and introduce a major change all at once without consultation with workers. This sort of change might occur when negotiated change has failed or because of rapidly changing external factors that need responding to quickly. Of course, this sort of change is likely to be resisted by middle managers and workers and its success depends on the skills of the senior managers in being able to establish new systems whilst minimising disruption.

Question 26

Why should managers address employee concerns to change? What three things should managers do ?

Answer 26

Failure to address the above questions can result in an expensive failure, with employee reactions ranging from simple misunderstandings (resulting in lost productivity or damage) to outright sabotage and organised industrial action. The best ways to avoid resistance to change are also the best ways to assure that employees are motivated to support the change effort. So managers should: * whenever possible involve workers from the beginning * clearly explain the reasons for the change * have a clear strategy, direction and vision

Question 27

Other than employee resistance to change, what else can happen? | Two things

Answer 27

1. Supplier resistance: Suppliers may be reluctant to adapt to changes made by their customers. For example, manufacturers who change to a Just in time (JIT) system may find that some of their suppliers resist having to supply components ‘as and when’ the manufacturer requires. This may well result in an increase in costs as deliveries need to increase in frequency. Unfortunately smaller suppliers may have no choice but to accept the situation or lose a valuable customer. Manufacturers should involve their suppliers from the outset, to explain that such change could result in increased orders and that all parties will benefit in the long run. 2. Owner resistance: Owners may fear that change will increase risk. Shareholders may need convincing that operating in new markets will not damage their dividends, especially as implementing change may be costly and may involve investment. Management will need to explain their plans to the shareholders carefully to convince them that sacrifice now will lead to better profit in the future.

Question 28

Lewins three step process of change A01

Answer 28

Lewin recognised that it was not the difficulty of creating change, but of re-enforcing the change that really mattered. He was concerned with ensuring that the change continued into the future and that workers did not slip back into old methods of working. Lewin saw three stages of creating and maintaining change: 1. Unfreezing 2. Change or transition 3. Refreezing

Question 29

Lewins three step process of change A01 1) Unfreezing

Answer 29

This involves creating a motivation for change. Creating a realisation amongst employees that change is necessary. They therefore have to ‘unfreeze’ from current approaches to work and be prepared to adapt to a new method of working. Employees have to be shown that change is necessary and then managers need to create a situation in which employees desire the change.

Question 30

Lewins three step process of change A01 2)Change or transition

Answer 30

Lewin described the period of transition as a potentially difficult time as workers are now moving toward a new way of doing things. They are learning about the changes and need to be given time to understand and adapt to these changes. Support from management and supervisors is important in making the transition period work. Support can come in the form of training, education, and learning from, and not being criticised for mistakes. Allowing workers to develop their own solutions and maintaining clear communication of the objectives and benefits of the change are also important in maintaining the transition.

Question 31

Lewins three step process of change A01 3)Refreezing

Answer 31

is about establishing stability once the changes have been made. Workers have now accepted the change, and the new methods of working have become the new norm. Workers are settled in new structures, methods of communication and are comfortable with their routines. This refreezing clearly implies workers must not be forced into continual change, but allowed time to adapt. New methods need to become completely ingrained before further change occurs, otherwise any gains may be lost.

Question 32

Organisational and culture change A01 | What does the cultue of an organisation reflect? ## Footnote -What does the culture of an organisation reflect? -When introducing a programme of change, there will inevitably be some degree of resistance; how great the resistance is will depend upon....? -Culture change must begin at the what..... of an organisation? -Leaders must put in place...?which are backed up by...? -They must also effectively what? Which can be achieved in a variety of ways such as ...? -If all else fails .... -If leaders can convince employees that the survival of the business is dependent upon any proposed changes, then the process is likely to have great what?

Answer 32

The culture of an organisation reflects the beliefs, norms and values of a business and often proves to be a very difficult thing to change. how great the resistance is will depend upon: - how entrenched the attitudes of the employees are, and how willing they are to adapt their working practices to meet the new organisational objectives. Culture change must begin at the top of an organisation. For example, the senior management of a business wishing to change its culture from being product-oriented to market-oriented, must have a very clear idea of how they expect the business to change. Leaders must put in place new methods of working which are backed up by training. They must effectively communicate to all staff the reasons for such a change in approach in order that everyone understands why the change is necessary. This may be achieved in a variety of ways such as team working, better communication and a system of rewards. If all else fails, some employees may be required to leave the organisation if a change culture is to be established. If leaders can convince employees that the survival of the business is dependent upon any proposed changes, then the process is likely to have greater momentum.

Question 33

How can the business evaluate (the success of) change?

Answer 33

need to examine a number of performance indicators in order to establish if its objectives have been achieved. This could take the form of examining the number of customer complaints received before, and after, the implementation of the changes to the organisation’s approach. There are a whole range of both quantitative and qualitative indicators that can be examined and these will obviously be related to the objectives initially set prior to the changes that have occurred.

Question 34

I change necessary?

Answer 34

There is no doubt that managing change can be extremely challenging, but there are very few businesses that can avoid adopting some degree of change. Markets are increasingly dynamic and those businesses that do not establish a culture of change are less likely to be able to respond to external forces. Those organisations that are flexible and able to cope with change are those that are likely to survive in today’s global marketplace.