What are the internal causes of change in a business?
Change in the size of the business, change in ownership, changes in the workforce (e.g. skills shortages, high turnover), and developments in technology adopted internally.
What are the external causes of change in a business?
Market changes, shifts in consumer tastes, new legislation, economic changes (e.g. recession), and technological developments in the wider environment.
What is the difference between planned and unplanned change?
Planned change is deliberate and managed in advance (e.g. launching a new product line). Unplanned change is sudden and reactive (e.g. responding to a new competitor or economic crisis).
What are the main effects of change on a business?
Need to update production methods/equipment, develop new products, meet new legal requirements, retrain the workforce, and seek new markets.
Why is managing change effectively important?
Poor change management leads to employee resistance, loss of productivity, damage to morale, customer dissatisfaction, financial loss, and ultimately business failure.
What are J. Storey’s four approaches to managing change?
Top-down (management drives change with little employee input), Bottom-up (employees are involved and empowered), Systematic (structured, planned approach following set processes), and Emergent (change evolves organically as the business responds to its environment).
Why might employees resist change?
Fear of job loss, uncertainty about new roles, loss of status, lack of trust in management, disruption to routine, and perceived unfairness.
What are ways of overcoming resistance to change?
Communication, employee involvement and consultation, training, offering incentives, phasing change gradually, and strong leadership.
What is Lewin’s three-step process for managing change?
Unfreeze (prepare the organisation for change by breaking down the existing mindset), Change (implement the new ways of working), and Refreeze (embed and stabilise the new approach so it becomes the norm).
What role does organisational culture play in managing change?
A flexible, open culture encourages acceptance of change, while a rigid or fear-based culture increases resistance. Leaders must actively shape culture to support change.
How can the management of change be evaluated?
By assessing whether objectives were met, comparing pre- and post-change performance, measuring employee morale and productivity, analysing customer satisfaction, and reviewing whether change was delivered on time and within budget.
What types of risk might a business face?
Natural disasters, failure of equipment/technology, employee error, supply chain problems, economic factors (e.g. recession), legal challenges, public relations crises, and product failures.
Why does the likelihood of a risk affect how much a business spends on prevention?
Businesses weigh the probability and potential impact of a risk against the cost of prevention — high-probability, high-impact risks justify greater investment in prevention than low-probability risks.
What is risk assessment?
The process of identifying potential risks, evaluating their likelihood and impact, and determining appropriate responses to minimise harm.
What are examples of preventative actions businesses can take?
Installing water sprinklers (fire), backing up IT data (cyber/technology failure), training employees (human error), maintaining equipment regularly, and enforcing health and safety procedures.
What is an insurable risk?
A risk that can be covered by an insurance policy because it is quantifiable and relatively predictable (e.g. fire, theft, employer liability, flood damage).
What is an uninsurable risk?
A risk that cannot be covered by insurance because it is too unpredictable, too broad, or entirely within the business’s control (e.g. poor management decisions, loss of reputation, changes in consumer tastes).
What is contingency planning?
Preparing in advance for potential risks by creating specific plans to manage those risks if they materialise, so the business can respond quickly and minimise damage.
What is crisis management?
The reactive process of responding to an unexpected event that poses a serious threat to the business, aiming to limit damage and restore normal operations as quickly as possible.
What are examples of contingency planning methods?
Maintaining contingency funds (financial reserves), arranging alternative production facilities, allocating specific responsibilities to managers/employees for crisis scenarios, and planning public relations responses in advance.
How can a business evaluate its responses to risk?
By reviewing whether contingency plans were effective, measuring the financial and reputational damage caused, comparing actual outcomes to planned responses, and updating risk assessments regularly.
How do political factors affect business activity?
Government policies on taxation, spending, regulation, trade, and minimum wage directly affect business costs, revenues, and the overall environment in which businesses operate.
What is the role of the government in providing a stable framework for business?
Governments provide the legal, regulatory, and economic infrastructure that allows businesses to operate with confidence — including contract law, property rights, competition policy, and monetary stability.
How do taxation and subsidies affect businesses?
Higher corporation tax reduces profit; higher income tax reduces consumer spending power. Subsidies lower costs and encourage investment in certain industries or regions.
