3.6

Question 1

Change management

Answer 1

Change management: Involves the process that ensures a business responds to the environment in which it operates. Three types
- Step Change
- Incremental change
- Disruptive change

Question 2

Step change

Answer 2

Step Change: Significant and occurs rapidly
- Dramatic or radical change in one fell swoop
- Often required when a business has suffered from strategic drift
- Often involves significant alteration in the business
- Get over it quickly and decisively
- May require some coersion to overcome resistance

Question 3

Incremental change

Answer 3

Incremental change: Change occurs over time in small stages
- Many small changes which take place as a business develops and responds to subtle changes in the external environment
- Usually involves little resistance
- Arises as strategy develops

Question 4

Disruptive change

Answer 4

Disruptive change: Interrupts market as a whole
-This is a form of step change that arises from changes in the external environment
-Rapid improvements in technology are the main driver
- Challenges the ‘business model’ how goods are sold and bought

Question 5

Causes of change

Answer 5

External:
- Takeover/Merger
- Political/Social
- Economical
- Technology
- Environmental
- Competitive
Internal:
- New leadership
- Communication
- Structure
- Finance
- Aims/Objectives
- Corporate culture

Question 6

What is scenario planning?

Answer 6

• Preparing for unpredictable and quantifiable problems
• Preparing for unexpected and unwelcome events
• Aims to reduce the impact of an unforeseeable event and plan how the business will resume normal operations after the crisis

Question 7

Why do scenario planning?

Answer 7

• Identifying what and how things may go wrong
• Understand the potential effects if anything goes wrong
• Devising scenario plans to cope with the threats
• Putting in place strategies to deal with the risks before they happen

Question 8

Evaluating scenario planning

Answer 8

• Risks vary in terms of their significance to the business and likelihood
• Scenario planning is not required for every eventuality
• Risks of strategic significance cannot be ignored

Question 9

Scenario planning

Answer 9

Planning (including expected responses) for unforeseen events

Question 10

Risk management

Answer 10

Handing potentially dangerous events for a business

Question 11

Trade offs

Answer 11

Often involve the loss or compromise of another opinion or factor

The higher the cost the lower the profit
But higher cost = better quality
Lower cost = higher profit

Question 12

What is risk in business?

Answer 12

• Possibility of loss or business damage
• Threat that may prevent or hinder ability to achieve business objectives
• Change that a hoped-for outcome will not occur

Question 13

Ways to deal with risk

Answer 13

• Ignore it (wait and see)
• Reduce probability of risk
• Share or deflect the risk (insurance etc.)
• Make scenario plans – prepare for it
• Treat risk as an opportunity – particularly if it also effects other competitors

Question 14

Identifying risks using risk assessment

Answer 14

• Natural disasters
• IT systems failure
• Loss of key staff

Question 15

Transformational leadership

Answer 15

When new leader such as CEO brings about change with the purpose of improving business performance
Impact of them on a business:
- Influence subordinates by motivating and inspiring them to help achieve goals
- Increase connection and identification between them and the subordinate
Identifying gaps and formulating new ideas
- Reduce burnout among their employees, incentives

Question 16

Floatation

Answer 16

Process where an Ltd. becomes a PLC

Question 17

Managing resistance to change

Answer 17

• Education and communication
• Participation and involvement
• Negotiation and agreement