Causes of business change?
- size
- poor performance
- PESTLE
- new ownership
- transformational leadership
What may change have an effect on?
- productivity e.g. new staff training, change in structure, new technology
- competitiveness
- financial performance
- stakeholders
How may change impact competitiveness?
Change is driven by the need to improve competitiveness.
- change through the process of growth can lead to economies of scale.
- changed linked to improved technology and therefore improved efficiencies can lead to a more flexible organisation with lower costs.
Either way, the aim is to improve competitiveness.
How may change impact financial performance?
Improving productivity and competitiveness should lead to increased revenue and ultimately profits.
Profitability is often the driver for internally imposed change.
How may change impact the actions of stakeholders?
- ๐ฌ๐ก๐๐ซ๐๐ก๐จ๐ฅ๐๐๐ซ๐ฌ may withdraw their support/investment if they fear that the change may not be successful and might not lead to return on their investment
- ๐๐ฆ๐ฉ๐ฅ๐จ๐ฒ๐๐๐ฌ may fear for their job security and status within the organisation
- ๐๐ฎ๐ฌ๐ญ๐จ๐ฆ๐๐ซ๐ฌ may react negatively to new products of processes e.g. complain
Impact of organisational culture on change?
- Organisations with strong culture more difficult to change
- Although leaders can quickly change the processes and structure of a business, it takes far longer to changes attitudes and beliefs within the business.
Impact of size on change?
- It is harder to impose change on large organisations.
- Partly due to the efforts needed to clearly communicate and implement the plan and retain employees.
- Large organisations also have different cultures and approaches across the company, especially if it is an MNC.
Impact of speed on change?
Pace of change may be determined by the external forces imposed on the business , e.g. the actions of competitions or new legislation.
Impact time has on change?
-Change sometimes easier when company is in strong position and is looking to ‘stay ahead of the competition’.
- However, change driven by poor performance can be difficult as leaders have to manage the expectations of customers, re-establish the brand, and deal with demotivation and uncertainty.
What may change include?
- new technology
- new ways of working
- new products
- new structures
- new processes and regulations
- new members of staff (leadership)
Reasons employees may be resistant to change?
- Self-interest - may lose out on pay, status etc
- Prefer present state - very comfortable, don’t want to go outside comfort zone
- Different assessment - disagree, believe no change necessary/ different approach better
- Misunderstanding - may not see need, not understand change process = fear of uncertainty
Things one can do to overcome resistance to change?
- education and communication
- facilitate and support
- participation and involvement
- manipulation and co-option - get individuals with influence on-board
- negotiation and bargaining - compromise e.g. better wages/working conditions
- explicit/implicit coercion - threats/authority, long-term success more important than short-term agreement
Scenario planning process?
- Identify possible trends and future issues
- Build possible scenarios
- Plan response
- Identify probability and most likely scenarios
- Put in place plan associated with the scenario
What is risk and what may a business do to prevent it?
The likelihood of a negative event occurring x impact of that negative event
Businesses may adjust their plans in order to minimise this risk or put in place a plan to deal with the negative outcome.
The risk of a negative outcome may be low even if the outcome is detrimental e.g. if there is only a 0.2 % chance of it occurring.
What are the key risks to a business?
- Natural disasters
- IT system failure
- Key employees lost
What are the degrees of risk mitigation?
Risk acceptance
Risk avoidance
Risk limitation
Risk transference
What is risk acceptance?
An acceptance that there is an element
of risk to every business venture is at
the heart of successful business and
risk management
What is risk avoidance?
The elimination of
hazards, activities and exposures that
can negatively affect an organisation’s
assets.
e.g. MNC pulling out of unstable country
What is risk limitation?
Risks can be limited by:
Watching what is said and done to reduce the
possibility of being sued
Managing data carefully
Become a LTD to gain limited liability
Hiring a good solicitor
Having plenty of insurance
What is risk transference?
Public liability insurance covers the
business for claims made against the
business by a client or member of the
public for accidental injury.
Employers’ liability protects the business
if an employee is injured and the business
has been negligent.
