3.10 Managing Strategic Change Flashcards
Give examples of internal factors that cause change
– Change in leadership/management – Better-than-expected performance – Poor financial performance – Business growth – The type of business can influence the amount of change
Give examples of external factors that cause change within a business
– New technology – Changes in consumer taste – The economy – Changes in legislation – Changes in ethical views and social awareness – Changes in competition
Give the two extremes of change
Incremental and disruptive
Describe incremental change
Incremental change is gradual. It is usually the result of a strategic plan being put in place and often attempts to minimise disruption. Managers decide a timescale for the necessary changes and then timetable strategies for cheering them
Describe disruptive change
Disruptive change is sudden and forces firms to suddenly do things in a different way to usual. They may have to close or sell off subsidiary companies, spend heavily on promotions to raise customer confidence or totally restructure the way the firms organised
What does a force field analysis show?
A force field analysis shows a plan of action, the forces supporting the plan and the forces opposing the plan
What is a force field diagram used to analyse?
It’s used to analyse forces for and against change
What is restructuring?
Changing the organisational structure of a business
Why do businesses restructure?
The main reason for restructuring is to maximise the efficiency of decision-making, communication and division of tasks in the businesses current situation. Restructuring can also reduce costs which makes the business more competitive
What is delayering?
Delayering means removing parts of an organisations hierarchy – this is usually a layer of middle managers
Why do businesses delayer?
Delayering reduces costs, improve communication and give more responsibility to employees at lower levels of hierarchy
After delayering, what type of structure do you end up with?
A flatter structure with wider spans of control. Flatter structures usually have quicker communication, as there are fewer people to pass messages through. This can help with decision-making in changing environments
How does delayering help a business respond to changes?
Delayering can help a business to respond to changes, such as a difficult economic condition. If it can carry out a delayering strategy quickly, then it can gain a competitive advantage – by cutting costs, it can keep its price is lower than competitors can
What is the biggest disadvantage to delayering ?
Delayering leads to job losses – the business risks losing some vital skills and experience which could reduce the flexibility of the business in the future. The job losses could also lead to bad publicity
What are the two types of basic business structures and which is better suited to change?
Mechanistic and organic structures
Organic structures are better suited to change than mechanistic ones
Describe the typical characteristics of a mechanistic structure
– centralised structure with a well defined hierarchy of power
– tall structure
– suited to businesses that don’t need to adapt to change very often
– employees are specialised in certain tasks and tend to work separately on them
Describe the typical characteristics of an organic business structure
– Decentralised structure meaning employees get more say in decision-making
– Flat structure which allows for fast communication
– best suited to an uncertain changing environment
– employees usually work within teams rather than having a strict single role each
What does knowledge and information management refer to?
Knowledge and information management refers to the collection, organisation, distribution and application of knowledge and information within a business
What is the most common barrier to change?
Resistance
Give five examples of barriers a business will face when implementing change
Organisational structure Resources Poor management Passive resistance Active resistance
How can organisational structure be a barrier to change?
Some structures can make it difficult to manage to change – e.g. if the business has a tall structure it can be difficult to communicate the change and the reasons for it to the lower layers
How can resources be a barrier to change?
Businesses need to have the correct resources in place before making a change – e.g. a business shouldn’t introduce new machinery into the employ someone who can operate it
How can poor management to be a barrier to change?
When managers are unable to communicate effectively and engage workers – this is usually the result of a lack of trust between the manager and the worker
What is passive resistance?
When people carry on with their old ways despite being aware of the new needs and being shown the new processes. Passive resistance is the most common in employees and suppliers
What is active resistance?
When people argue against the change and challenge motives for the change.
How do workers show active resistance?
Workers can organise themselves for their trade union and refuse to carry out tasks
How do customers show active resistance?
Customers show active resistance by refusing to make further purchases from the company
Who came up with 4 reasons for resistance to change?
Kotter and Shlesinger
What are the four reasons for resistance to change that Kotter and Schlesinger came up with?
Self-interest
Misunderstanding
Low tolerance of change
Different assessment of the situation
Why can self interest be a resistance to change?
People are more concerned with their own situation rather than the success of the business – if they can’t see how to change directly benefits them, they will resist it
How can misunderstanding be a resistance to change?
People resist change when they don’t fully understand what it means for them. They will usually think that they have more to lose than gain until they are told otherwise
How do businesses prevent misunderstanding resistances?
Businesses need to have a high level of trust between employees and managers to prevent misunderstandings
Why do people resist changes due to having low tolerance for change?
People get used to completing tasks the way they know – they will resist change if they fear that they won’t be able to develop the new skills required after the change. They may believe that they won’t perform as well in the situation and they will lose their job security
How do different assessments of the situation become a resistance to change?
The key stakeholders may have strong disagreements over the reasons for change and therefore they may be an inability to accept the need for change
Who identified six ways of overcoming resistance to change?
Kotter and Schlesinger
What are the six ways of overcoming resistance to change?
Education and communication Participation and involvement Facilitation and support Negotiation and agreement Manipulation and co-option Explicit and implicit coercion
How do managers use education and communication to overcome resistance to change?
Managers need to raise awareness of the reasons for change and how it will be carried out. The education process usually involves discussions, presentations and reports. They should clearly communicate the reasons behind the planned change and identify the benefits for the business and individuals
How does participation and involvement overcome resistance to change?
Key stakeholders should be involved in the design and implementation of change. If they participate in the decision-making process they will feel more engaged and their ideas form part of the change. If people become part of the process, it will be more difficult for them to resist a change
How does facilitation and support overcome resistance to change?
Listening to the concerns of the workforce by holding regular meetings will help workers to adjust as they will feel supported. Support groups can help workers to overcome their anxiety about the changes. Businesses should also provide training from work as they will be required to gain new skills
How does negotiation and agreement help to overcome resistance to change?
Giving stakeholders opportunities to negotiate and compromising over key sticking points can lead to full agreement over the proposed change. Financial or non-financial incentives may need to be offered by the business in order to gain full acceptance of the change.
If full agreement can’t be made them voluntary redundancy or early retirement maybe be offered to employees who are resisting the change
How does manipulation and co-option assist in overcoming resistance to change?
An employee who is resisting change may be given a desirable role in the decision-making process in order to gain their cooperation. This can be a risky strategy as these roles often give the worker little power and they can feel tricked into agreeing to the change. Alternatively, a manager may manipulate the information regarding the change e.g. they may exaggerate the extent of a financial crisis and states there is no other alternative
When is explicit and implicit coercion used to overcome resistance to change and how does this coercion overcome the resistance?
As a last resort, in order to speed up the process, a person may be threatened to comply with the planned changes or face consequences. The consequences of resistance could be clearly stated or just implied. These could be redundancies, losing out on promotion opportunities or transferred to other departments etc
What is organisational culture?
Organisational culture is the way that people do things in a company and the way that they expect things to be done. It’s an important way to shape the expectations and attitudes of staff and managers
What is a strong organisational culture?
Organisational culture is strong when employees agree with the corporate values of the company
What is a weak organisational culture?
Weak culture is where the employees of the company don’t share the companies values and have to be forced to comply with them
What are the four main types of organisational culture according to Charles Handy?
Power
Role
Person
Task
Explain what a power culture is
Power cultures have a centralised structure where decision-making authority is limited to a small number of people
If there is a power culture, are employees more likely to be resistant to change?
Employees are likely to be more resistant to change because they don’t have the opportunity to give their opinion on what changes should and shouldn’t be made
Explain what a role culture is
Role cultures are common in bureaucratic firms where authority is defined by job titles. Decisions come from senior managers, so employees don’t have the opportunity to get involved in the decision making process.
What type of communication do role cultural organisation have?
Organisations with role cultures tend to have poor communications between departments so they respond to slowly to change
In what type of companies are person cultures most common?
Person culture is common in loose organisations of individual workers, usually professional partnerships such as solicitors, accountants, doctors etc
How are objectives formed in a business with a person culture?
The objectives of these firms will be defined by personal ambitions of the individuals involved. The firms have to ensure that the individual is actually have common goals
How are decisions made within a person culture and why can decisions be difficult to make?
Decisions are made jointly so all employees are likely to be comfortable and accepting of any changes that are made because they’ve agreed to them.
However, decisions on change can be difficult to make – individuals will often think about what is best for themselves rather than thinking about what is best for the organisation
Describe what is a task culture
Organisations with a task culture place an emphasis on getting specific tasks done
How do people work within an organisation that has a task culture?
Task culture get small teams together to work on a project, then disbands them. There may be conflicts between teams for resources and budgets. It can be confusing if a firm has too many products or projects
How do staff respond to change within a task culture?
Staff working in a company with a task culture are likely to think that changes normal because they are used to changing teams often and working with a variety of people. This means that they are less likely to be resistant to change in general
What data allows businesses to assess the cultural differences when dealing with businesses from different countries?
Hofstede’s national cultures
What are the four dimensions countries are scored on in Hofstede’s national cultures data?
– Individualism and collectivism
– Masculinity and femininity
– High power and low power distance index
– Uncertainty avoidance
What is an individualist culture?
An individualist culture is one where each person will look to maximise their personal self interest
What is a collectivist culture?
A collectivist culture is one where individuals will work as a team to achieve mutually beneficial outcomes
If a country has a high score for individualism and collectivism, what does this indicate?
High score =individualist culture
If a country has a low score for individualism and collectivism, what does this indicate?
Low score = collectivist culture
What is a masculine culture?
Masculine cultures are highly competitive and powerful, with contrasting gender roles
What is a feminine culture?
Feminine cultures focus on caring, quality of life and there is a concern for others
If a country has a high score for the masculinity and femininity dimension, what does this indicate?
High score = masculine culture
If a country has a low score for the masculinity and femininity dimension, what does this indicate?
Low score = feminine culture
What is the power distance index?
The power distance index is the extent to which people accept that power and wealth is distributed unequally
If a country has a low power distance index score, what does this mean?
Societies with low power distance expect equality
If a country has a high power distance index score, what does this mean?
Societies with high power distance accept the hierarchy of power without argument
What is uncertainty avoidance?
Uncertainty avoidance is the extent to which people attempt to minimise uncertainty and risk
If a country has a low score for uncertainty avoidance, what does this mean?
Low score = a risk taking society
If a country has a high score for uncertainty avoidance, what does this mean?
High score = Not a risk taking society
What are 4 specific types of organisational structure of business can use?
Functional
Product based
Regional
Matrix structures
How are employees organised in a functional structure?
Functional structures organise staff by department
How are employees organised in a product-based structure?
Product-based structures organise staff by product
How are employees organised in a regional structure?
Regional structures organise staff by geographical location
How are employees organised in a matrix structure?
Matrix structures organise staff by two different criteria
The matrix structure insures that the staff are pursuing clearly defined objectives and encourages departments to build relationships with one another
Give the formula for total float of an activity
Total float = LFT – duration – EST
Give 4 advantages of critical path analysis
– Helps firms forecast their cash flow
– Find the shortest time possible for completing a complex project
– It can be used as a visual aid to communicate with employees
– It can be used to review progress on individual tasks
Give 4 disadvantages to critical path analysis
– Relies on estimates of how long each task will take
– Constructing and amending the network will require a significant amount of planning and time
– The network analysis sets tight deadlines – employees may cut corners in the rush to meet deadlines
– There is no information about costs or how good the project is going to be
What is a planned strategy?
Planned strategy is planned out before action is taken to implement it
What is an emergent strategy?
Emergent strategy develops over time, as a businesses actions lead to patterns of behaviour. Emergent strategy can be adapted as the business learns what works in the current environment
What is strategic drift?
Strategic drift is what happens when a strategy becomes less and less suited to the business environment. It happens when a business’ strategy doesn’t do that to keep up with the changes in the environment
