Unit 10- Managing strategic change

Question 1

What are the causes for change

Answer 1

Internal:
-New leadership
-Significant investment decisions
-Changes in corporate objectives
-Change in strategic direction
-Adjusting organisational structure

External:
-Significant competitor actions
-Significant changes in economic environment
-Longer-term changes in society
-Political & legal changes
-Technological change

Question 2

What are the types of change

Answer 2

Incremental change: Making small scale improvements to business processes

Disruptive change: Transformational change which is likely to involve radically rethinking or redesigning a major business process with the objective of making large-scale improvements quickly

Question 3

What is Lewin’s Force Field Analysis and some examples of driving forces and resisting forces?

Answer 3

Helps managing changes by determining the forces driving changes vs those resisting change. Change may be considered necessary, but it will not happen if the resisting forces are greater than the driving forces. Managers can use this model to identify resistance and develop strategies to remove them. These forces can be internal or external

Driving forces:
-Increased competition
-Poor HR performance
-Poor financial performance
-Dissatisfied customers
-Shareholders response

Resisting forces:
-Employee resistance
-Lack of finance
-Existing power and organisational structure
-Shareholders’ responses
-Poor financial performance
-Poor HR performance
-Dissatisfied customers

Question 4

What is Kotter and Schlesinger’s model for resistance to change?

Answer 4

Kotter & Schlesinger suggested that there are four main reasons why change is resisted.

1) Parochial self-interest: Only care about impact of change on themselves and not the business

2) Misunderstanding: Do not believe what assessment managers tell them or lack of info/poor communication

3) Different assessments of the situation: Do not agree with the managers assessment

4) Low tolerance of change: Workers fear they don’t have the skills to cope with the change, unwilling to re-skill

Question 5

What is Kotter and Schlesinger’s model for overcoming resistance to change?

Answer 5

1) Education & Communication: Employees have trust in management but might have a misunderstanding as the reason for the change.

2) Participation & Involvement: Some stakeholders may see the change differently and disagree with the manages perception of change, get stakeholders involved in the process

3) Facilitation & Support: Employee may have low tolerance for change, so may need support with training. But, this would come at a considerable cost to the business and an opportunity cost when all the business is after is compliance

4) Negotiation & Agreement: Bargain and negotiate with powerful stakeholders who may see the change differently. But this would lead to compromises and ‘different’ change that planned

5) Manipulation & co-option: Offer rewards to win over high power stakeholders, hopefully other stakeholders will therefore join the movement and comply. But, these stakeholders cause mischief

6) Coercion: If nothing else has worked just force it through- ‘get them out of the way’.

Question 6

What is a flexible organisation

Answer 6

An organisation that is able to adapt and respond relatively quickly to changes in its external environment in order to gain advantage and sustain its competitive position.

Question 7

What are the ways of being flexible

Answer 7

-Restructuring
-Delayering
-Organic v Mechanistic structure
-Flexible employment contracts

Question 8

What are the ways of being flexible: Restructuring

Answer 8

-Tall -> flat: There are few levels of hierarchy. Lines of communication are short, making the business responsive to change & decision-making quicker. Managers have a wider span of control & need to delegate & empower staff, therefore taking on more responsibility to suggest changes or make change happen

Centralised -> Decentralised: The head office delegates authority down the chain of command, thus increasing the speed of decision-making. Business will be more responsiveness to changes in each area as managers have greater local knowledge. More employees will be motivated as they are given the opportunity to suggest changes relevant to their area & implement ways of responding to these changes

Traditional by function: A traditional by function or tall structure can lead to slow communication & decision making making the business unresponsive ti change in its market as well as its external or internal environments

Matrix structure: Can lead to greater innovation enabling a business to adapt more quickly to changes by providing staff with an opportunity to learn new skills from other members of the team.

By product or service: Can lead to departments respionding more quickly to change in their specialist product or service area.

By region: Can lead to each department of the business can meet the needs of local markets & can react quickly to external factors

Question 9

What are the ways of being flexible: Delayering

Answer 9

Delayering can help a business to respond to changes, such as difficult economic conditions. If it can carry out a delayering strategy quickly, then it can gain an advantage over its competitors by cutting costs & it can keep its prices lower than its competitors can

Question 10

What are the ways of being flexible: Organic v Mechanistic structure

Answer 10

Organic structures are more flexible structures more able to adapt to change. Decentralised decision making, flat structure allowing fast communication and staff tend to be multi-skilled & work in teams

Mechanistic structures are more formal and rigid. Centralised decision making, tall structure leading to slow communication and staff are specialised in certain areas or tasks & tend to work alone.

Question 11

What are the ways of being flexible: Flexible employment contracts

Answer 11

Types of flexible working contracts:

-Part time
-Temporary
-Agency
-Zero hour
-Flexi time
-Job share
-Self-Rostering
-Home/Remote working
-Contactor/Freelancer
-Term-Time only
-Annualised hours
-Compressed hours
-Shift or nigh time
-Mobile working/teleworking

Question 12

Advantages and disadvantages of flexible contracts

Answer 12

-Reduces labour costs
-Work-life balance, motivation & higher productivity
-Easier to recruit & retain
-Reduces labour turnover & absenteeism

-Higher admin costs
-Lack of continuity
-Communication & training

Question 13

What is organisational culture?

Answer 13

The way that people do things in a company & the way that they expect things to be done.

Question 14

Pros of a strong culture

Answer 14

-Can give a competitive advantage through greater efficiency & innovation

-Results in motivated & loyal workforce who accept roles & responsibilities willingly & abide by policies

-‘Everyone buys into it’

Question 15

Cons of a weak culture

Answer 15

-Employees treat the organisation as a source of income only; motivation & attachment is low

-Employees have to be forced to perform duties

-Greater management control & supervision is required

Question 16

What is Charles Handy’s types of culture?

Answer 16

Charles Handy defined 4 different kinds of culture:

Power culture: Control radiates from the centre, concentrates power among a few, Few rules and little bureaucracy, swift decisions are possible, found in entrepreneurial organisations.

Role Culture: People have clearly delegated authority within a highly defined structures, Hierarchical bureaucracy, Power drives from a person’s position, little scope for expert power, decision making slow.

Task Culture: Teams are formed to solve particular problems, No single power source, Power drives from expertise, Matrix organisation, team may develop own objective.

Person Culture: People believe themselves to be superior to business, Business full of people with similar training, background and expertise, Power lies in each group of individuals, success depends on retaining key personnel.

Question 17

Why is culture important?

Answer 17

It cements employees’ confidence in their work, and keeps them motivated and inspired to do their best.

Question 18

Reasons for changing culture?

Answer 18

When a new leader joins a business: because they may have a different personality & attitude.

When a business is underperforming or failing: Experiencing:
-Declining sales & profits
-Loss of market share
-Inefficiencies due to high labour turnover & absenteeism & difficulties hiring talented staff
-Poor customer service
-Poor reviews
-Lack of innovation
-Loss of reputation
-Been found guilty/fined for breaking laws or acting unethically
-Being investigated by a regulator

Question 19

Difficulties in changing culture?

Answer 19

-Employees usually resist change including changes in organisational culture.

-Changing culture means changing attitudes & behaviours of staff so it is much more complicated than changing things like pricing strategy

-Changing culture can also be very expensive: training staff, changing office layout.

-The HR department plays a big role in changing the organisational culture of a business. They might need to change their recruitment, change payment and reward systems.

Question 20

What is Hofstede’s model of national cultures

Answer 20

Looks at key differences in organisational cultures based upon national cultures. It shows the effects of a society’s cultures on the values of people in the workplace & how these values affect behaviours & organisational culture in different countries

Question 21

What are Hofestede’s 5 cultural dimensions?

Answer 21

Power distance: Type of relationship with your boss & colleagues: degree of acceptance of authority & hierarchy within the workplace. ‘Low power distance’ means you can accept each other as friends

Uncertainty avoidance: How much risk do you like to take at work, how much are you allowed to take.

Individualism/Collectivism: Which needs are more important, team player or working by yourself. Which needs do you put first, yourself or your teams

Masculinity/femininity: Attitude and behaviour in the workplace: do you tend to be aggressive or competitive at work, do you focus more on achieving task rather than being concerned about the welfare of your colleagues

Long/Short term orientation: Do you focus on short-term goals or long term ‘legacies; plans? Is sustainability important to you

Question 22

What are the key stages of strategic process

Answer 22

-Identify the business’ long term vision

-Analyse the business’ internal
performance & external environment

-Set corporate objectives

-Decide on a strategy: Porter’s Generic model, ansoff’s matrix and Bowmans clock

-Implement the strategy

-Evalulate success: Financial ratio analysis, Balanced Scorecard, Triple bottom line

Question 23

Why is leadership (the right management style & culture) key to the successful implementation of a new strategy?

Answer 23

Implementing a strategy means making big changes and strong & effective leadership is required to make sure changes go as smoothly as possible.

Question 24

Why is communication key to the successful implementation of a new strategy?

Answer 24

Effective communication will ensure that all employees understand what they should be doing & why they are doing it. If employees share the vision for the business, they are more likely to be successful. It is important that employees understand the part they play in strategic implementation & where they are along the process of implementation.

Question 25

Why is the right structure key to the successful implementation of a new strategy?

Answer 25

The structure is the arrangements of roles & tasks needed to implement the strategy. Sometimes, it may be necessary to redesign the organisational structure in order to make it relevant to the strategy.

Question 26

What are the key terms of network analysis?

Answer 26

EST: Earliest start time
LFT: Latest finish time
Critical Activity: 0 float
Float: LFT-duration-EST
Critical Path: path with least float

Question 27

Pros and cons of using network analysis

Answer 27

-This method requires managers to consider the shortest duration of each activity of each activity of a project

-Requires managers to consider simultaneous tasks

-Meant to save time & money

-Identifies priority tasks

-Timings are all estimates and could be wrong

-Unforeseeable events may occur

-Could become too complicated for large projects

-One change in a critical activity affects all the other calculations

Question 28

Internal and external reasons for business failure

Answer 28

Internal:
-Liquidity problems
-Lack of planning
-insufficient start up capital
-Poor leadership
-Cash flow management
-Bankruptcy
-Poor planning
-Lack of skills

External:
-Economic conditions
-Competitive forces
-Trends & fashion
-Technology

Question 29

What is a planned strategy?

Answer 29

One that is formulated & then carried out over a period of time.

Question 30

What is an emergent strategy?

Answer 30

One that develops as the strategic plan was implemented

Question 31

What is the strategic drift model?

Answer 31

Phase 1: Incremental change, the business remains competitive due to incremental changes in strategy that are made in line with the external environment.

Phase 2: Strategic drift, begins to appear as the incremental changes fail to keep up with a faster rate of change in the external environment

Phase 3: Flux, A state of flux in strategy now develops where the management recognises the existence of drift due to poorer performances & tries to make strategic changes

Phase 4: Transformation change or demise, This is the final phase when the business either fails completely or undertakes a transformational change to realign itself with the external environment

Question 32

What is divorce of ownership and control?

Answer 32

The separation of ownership (shareholders) & control (elected board of directors) in a PLC

Question 33

What is corporate governance?

Answer 33

A set of systems, processes & principles that ensure a business is managed in the best interest of all its stakeholders.

Accountability
Fairness
Transparency
Responsibility

Question 34

What is contingency planning?

Answer 34

Planning for the unexpected such as natural disasters or loss of data

Question 35

Pros and cons of having a contingency planning?

Answer 35

-Speeds up recovery process
-Saves money
-Shows ethical concerns (CSR)

-Costly & time consuming
-Opportunity cost
-Could be a waste of money as event may never happen
-Better to take risk?