Topic 4 - Change Management Flashcards
(48 cards)
What is change management?
A process that coordinates business systems to control and manage change within an organisation.
Who are the business change stakeholders?
1) Business
Requires successful implementation of new systems, policies and technologies to respond to the business environment and new strategic direction.
2) People
For change to be successful, all employees, at all levels must understand the reasoning driving the change and believe it will improve the business while also positively impacting on their own role within the organisation.
What are some examples of change?
- Offering new products and services
- International expansion
- Entry into a strategic alliance
- Outsourcing
- Downsizing
What are internal factors that drive change in a global environment?
1) The Extent of a Businesses Financial Resources
Limited or abundant financial resources force businesses to change their strategies, operations, and investment decisions to either survive or grow globally
2) Transition from Physical Stores to Online Stores Worldwide
The need to reach a broader customer base and stay competitive drives businesses to restructure operations and shift resources toward online platforms.
3) Introduction of New Products in Global Markets
Pursuing global relevance and competitiveness pushes businesses to innovate, restructure departments, and align operations with new market needs.
4) Establishing Strategic Alliances with Overseas Businesses
The desire to access new technologies, markets, or efficiencies forces businesses to adapt internal processes and build new collaborative models
5) Staff Downsizing for Cost Reductions in Global Operations
Pressure to lower costs and remain profitable drives businesses to reorganize workforce structures and adopt leaner, more efficient models.
What are external factors that drive change in a global environment?
PEST Factors:
Political and Legal
Economic
Social
Technologial
What are political and legal external factors?
1) Changes in Government Regulations:
New laws or regulations force businesses to alter products, practices, or markets to remain compliant and avoid penalties.
2) Political Instability in Key Markets:
Unstable political environments push businesses to rethink market strategies, supply chains, and risk management processes.
What are economic external factors?
Global Economic Downturns or Booms:
Shifts in global economic conditions drive businesses to cut costs, innovate, or expand depending on consumer spending patterns.
What are social external factors?
1) Consumer preferences and social norms:
Evolving social norms can drive change as people’s expectations and consumption behaviours change.
2) Demographic Shifts:
Changes in population age structures push businesses to tailor services, workforce planning, and product development.
What are technological external factors?
Emergence of New Technologies:
New technologies force businesses to innovate operations, retrain staff, and sometimes completely redesign business models to stay competitive.
What is resistance to change?
Is when people or groups within an organisation push back against or struggle to accept a change. It can be passive (ignoring new procedures) or active (protests).
How can resistance to change manifest (show up)?
- Poor communication between staff and management.
- Decreased productivity.
- Low staff morale
- Sabotage or refusal to adopt new processes.
- Higher staff turnover.
What are impacts of resistance to change?
- Delay or derail projects.
- Increase operational costs.
- Damage the businesses reputation
- Reduce competitiveness in the global market.
- Create long term performances.
What are the 4 reasons for resistance to change?
1) Financial Costs
2) Managerial Inertia
3) Cultural Incompatibility in Mergers/Takeovers
4) Staff Attitude
What does financial costs refer to?
Refers to the expenses involved in implementing change, which can lead to resistance if the business sees the costs as too high or risky.
Why do financial costs matter?
- Change can be expensive and hard to predict.
- High costs may strain budgets or reduce profits.
- Businesses may delay or reject change to avoid financial risk.
What are the types of financial costs associated with change?
1) New equipment and technology:
Upgrading systems or machinery often involves large upfront costs that can strain budgets.
2) Staff Training:
Teaching employees new processes or tools takes time and money, especially in large organisations.
3) Redundancy Payouts:
When roles become unnecessary, businesses must pay out contracts, which adds significant short-term cost.
What is incremental change?
It is introduced gradually, making it easier to plan and spread costs over time.
- It carries lower financial risk, as changes can be tested, adjusted, and absorbed into regular budgets.
What is transformational change?
It happens quickly and on a large scale, often requiring major upfront investment.
- It is more difficult to budget for, with higher risk of cost blowouts, cash flow pressure, and financial resistance.
- Requires a lot of capital quickly and may disrupt normal operations.
What is managerial intertia?
Managerial inertia is when business leaders resist or avoid change, choosing to stick with familiar routines even when the business environment demands adaptation or better alternatives exist.
Why does managerial inertia exist?
- Fear of the unknown or potential failure
- Satisfaction with current performance
- Lack of motivation or urgency to take action
- Limited time or energy to plan and manage change
- Lack of skills or confidence to implement new systems or lead transformation
What are some methods that break managerial inertia?
1) Create dissatisfaction
- Show that current methods are outdated, inefficient, or holding the business back.
- People are more willing to change when they feel the current situation is no longer acceptable.
2) Involve people
- Engage managers and staff in identifying problems and designing solutions.
- Involvement increases ownership and reduces fear or resistance, as people feel part of the process.
3) Share the plan
- Communicate a clear vision and step-by-step approach to the change.
- A clear plan builds trust and reduces uncertainty, helping staff feel more confident and prepared.
What is cultural incompatibility in mergers/takeovers?
Cultural incompatibility happens when businesses struggle to integrate after a merger or takeover (acquisition) due to conflicting organisational or regional cultures.
Why does cultural incompatibility exist?
1) Business culture incompatibility:
Organizations may have different values, communication styles, leadership approaches, or workplace expectations. These differences can cause confusion and conflict during integration.
2) Regional cultural incompatibility:
Mergers and takeovers that span countries or regions often bring together workforces with contrasting cultural norms — including attitudes toward hierarchy, time, teamwork, or decision-making.
What is staff attitude?
Staff attitude refers to the thoughts, feelings, and behaviours employees have toward change. Negative attitudes can lead to resistance, especially when employees feel unprepared, insecure, or disconnected from the change process.
