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AQA A-level Business > 3.10 Managing strategic change > Flashcards

3.10 Managing strategic change Flashcards

1
Q

Causes and pressures for change - INTERNAL & EXTERNAL

A

Internal - changes that happens within the business e.g. restructuring, delayering

External - changes that happen outside of the business e.g. laws and social trends

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2
Q

Causes & pressures for change - INCREMNTAL

A

Changes occurs over a period of time in incremental, small stages

Usually involves little resistance

Arises as strategy develops

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3
Q

Causes & Pressures for change - DISRUPTIVE

A

A form of step change (significant + rapid change) that arises from changes in the external environment

Impacts the market as a whole

Rapid movements in technology are the main driver of disruptive change

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4
Q

Lewin’s Force Field Analysis Model

A

Provides an overview of the balance between forces driving change in a business and the forces resisting change

In order for change to occur the driving force must exceed the restraining force

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5
Q

Lewin’s Force Field Analysis - Forces driving change

A

INTERNAL FORCES INCLUDE:
- need for higher profits
- poor efficiency
- lack of innovation
- need to change culture & leadership

EXTERNAL FORCES INCLUDE:
- customer demand
- competition
- ethics

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6
Q

Lewin’s Force Field Analysis - Resistance to change

A

Forces include:
- Self interest –> individuals concerned about implications for them
- Misunderstanding –> communication problems
- Low tolerance of change –> sense of insecurity

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7
Q

Flexible organisations - ORGANIC V MECHANISTIC STRUCTURES

A

ORGANIC STRUCTURES:
- informal
- flexible & fluid (easy to change)
- favours verbal communication
- associated with decentralised decision making & empowerment
- finds change easier to handle

MECHANISTIC STRUCTURES:
- Formal
- bureaucratic (finds it harder to change)
- formal communication methods
- associated with centralised decision-making
- little perceived need to change

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8
Q

Flexible Organisations - DELAYERING (pros & cons)

A

Removing layers of management from hierarchy of the business

PROS:
- less layers = less staff = lower labour costs
- faster decision making & better communication
- wide span control = emphasis on teamworking + empowerment

CONS:
- redundancy payments needing to be paid
- increased workload on managers
- impact of redundancies on others –> reduces morale

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9
Q

Flexible Organisations - FLEXIBLE EMPLOYMENT CONTRACTS (pros & cons)

A

Includes part-time, working from home, temporary contracts

PROS:
- savings on costs e.g. overheads like wages and training
- higher job satisfaction & employee morale for those who want to work flexibly –> balance between work and social lives
- may attract more applicants for available jobs

CONS:
- investment in technology to support effective flexible working
- reduced motivation due to increased isolation
- loss of capability if key employees reduce their hours

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10
Q

Flexible organisations - RESTRUCTURING

A

Involves changes to the capital structure of the business to reduce debt and reductions in the scale and scope of the business’ activities (e.g. closing down business units)

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11
Q

Kotter & Schlesinger’s 4 reasons for resistance to change

A

1) Self-interest
2) Low tolerance for change & Inertia
3) Different assessment of the situation
4) Misinformation & misunderstanding

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12
Q

K & S Resistance to change - SELF INTEREST

A

Powerful motivator

Arises from a perceived threat to job security & financial status

Individuals often place their own interests ahead of those of their organisation, particularly if they don’t feel strong loyalty to it

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13
Q

K & S Resistance to change - LOW TOLERANCE & INERTIA

A

Many people suffer from inertia or reluctance to change –> preferring things to ‘stay the way they are’

Many people need security, predictability & stability in their work

If there is a low tolerance to change then resistance may grow

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14
Q

K & S Resistance to change - DIFFERENT ASSESSMENT OF SITUATION

A

Disagreements about the need for change

Some people may disagree with the change proposed –> or they may feel as if they have a better solution

Resistance is based on disagreements about what is best for the business

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15
Q

K & S Resistance to change - MISINFORMATION & MISUNDERSTANDING

A

People don’t understand why change is needed –> perhaps because they are misinformed about the position of the business

No compelling reason for change

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16
Q

Kotter and Schlesinger’s 6 ways to overcome resistance to change

A

1) Education & communication
2) Participation & involvement
3) Facilitation & support
4) Manipulation & Co-option
5) Negotiation & Bargaining
6) Explicit & Implicit coercion

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17
Q

K & S Overcoming resistance to change - EDUCATION + COMMUNICATION

A

Successful change is achieved through effective communication

Honest communication about issues helps people see the logic of change

Effective education helps address misconceptions about change

Education + communication are long-term strategies

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18
Q

K & S Overcoming resistance to change - PARTICIPATION & INVOLVMENT

A

Involvement is an effective way of bringing everyone ‘on board’

Effective participation often leads to commitment

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19
Q

K & S Overcoming resistance to change - FACILITATION & SUPPORT

A

Some people will need support to help cope with change

Might include training, counselling and mentoring

If fear & anxiety is causing resistance then support is important

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20
Q

K & S Overcoming resistance to change - MANIPULATION & CO-OPTION

A

Co-option involves bringing specific individuals into roles that are part of change management

Manipulation involves selective use of information to encourage people to behave in a certain way

21
Q

K & S Overcoming resistance to change - NEGOTIATION & BARGAINING

A

Idea to give people who resist an incentive to change

Involves offering better financial rewards for those who accept requirements of the change programme

Approach is commonly used when the business need restructuring

22
Q

K & S Overcoming resistance to change - EXPLICIT & IMPLICIT COERCION

A

This option is the last resort

Explicit coercion - involves people being told exactly what the implications of resisting change will be

Implicit coercion - involves suggesting likely negative consequences for the business of failing to change w/o making explicit threats

Coercion damages trust between people –> damages morale

23
Q

Handy’s Models of Organisational Culture - POWER CULTURE

A

Few key people at the centre of the organisation who make all the major decisions

+ those at the centre have an overview of everything –> leading to quick decision making & consistent approach

  • however as business expands –> leads to great pressure and heavy workload for those in the centre –> slow decision making & stress
24
Q

Handy’s Models of Organisational Culture - ROLE CULTURE

A

People have clearly delegated tasks within the organisation –> they know who to report to and who they are responsible for

Creates order, structure and certainty in a business

25
Q

Handy’s Models of Organisational Culture - TASK CULTURE

A

Teams are formed to solve particular problems

Power derives from expertise as long as a team requires expertise

26
Q

Handy’s Models of Organisational Culture - PERSON CULTURE

A

Individuals are given their own parts of the business to make decisions on and to control

Power lies in each group of individuals

27
Q

Hofstede’s National Cultures

A

1) Individualism v Collectivism
2) Power distance
3) Masculinity v Femininity
4) Uncertainty Avoidance
5) Long-term orientation
6) Indulgence v Restraint

28
Q

Hofstede’s National Cultures - INDIVIDUALISM V COLLECTIVISM

A

Some societies value performance of individuals

For others, its more important to value the performance of the team

Has important implications for financial rewards at work

29
Q

Hofstede’s National Cultures - POWER DISTANCE

A

Considers the extent to which inequality is tolerated

High power distance suggests a national culture that encourages bureaucracy and high respect for authority and rank

Whereas a low power distance suggests a national culture that encourages a flatter organisation, greater emphasis on personal responsibility and autonomy

30
Q

Hofstede’s National Cultures - MASCULINITY V FEMININITY

A

Considers the differences in decision-making

Masculine = hard-edged, fact-based & aggressive style decisions

Feminine = greater degree of consultation & intuitive analysis

31
Q

Hofstede’s National Cultures - UNCERTAINTY AVOIDANCE

A

Different attitudes to risk-taking between countries

Low levels of uncertainty avoidance = willingness to accept more risk, work outside the rules and embrace change

High levels of uncertainty avoidance = more support for rules, data, clarity of roles and responsibilities

32
Q

Hofstede’s National Cultures - LONG-TERM ORIENTATION

A

Businesses that take a much longer-term perspective which is likely to encourage more long-term thinking

33
Q

Hofstede’s National Cultures - INDULGENCE V RESTRAINT

A

Indulgence = society which allows relatively free gratification of human needs –> related to enjoying life and having fun

Restraint = society that suppresses gratification of needs and regulates it by means of strict social norms

34
Q

Reasons for changing organisational culture

A

Symptoms for the need of a new organisational culture:
1) High staff turnover and absenteeism
2) culture becomes bureaucratic (revolves around centralisation)
3) Communication more closed & restricted

Key Reasons to change organisational culture include:
1) Business performance
2) New leadership / strategy
3) changes in external environment
4) support change management

35
Q

Problems of changing organisational culture

A

Hard to change as culture is deeply embedded

Employees may resist change –> especially if they were performing well beforehand (why the need for change then?)

Changing culture = changing beliefs and values which are deeply embedded –> values & beliefs are being questioned now

36
Q

Value of communications in strategic implementation

A

Good communication is valuable because:

  • it can help overcome resistance from all stakeholders
  • helps reduce distrust & shows the benefits to those involved
  • Allows managers to see flaws in the plan from advice &
    communication from others
  • provides a sense of direction and purpose too
37
Q

Importance of organisational structure in strategic implementation - FUNCTIONAL STRUCTURE (pros & cons)

A

Each function (HR, finance, operations & marketing) form part of the business

PROS:
- each member in each function can share expertise
- everyone can help solve problems together

CONS:
- Silo effect where members only prioritise & view the business through their function –> thus disregard the business as a whole
- Silo effect –> lack empathy with other functions and don’t try hard to view the business through other functional perspectives

38
Q

Importance of organisational structure in strategic implementation - PRODUCT STRUCTURE (pros & cons)

A

Occurs when a business has multiple product lines that have different customer bases, different challenges & opportunities

PROS:
- different lines of products with different customer needs is logical as it groups specific skills & expertise for that group of customers

CONS:
- the divisions may see themselves as competing against each other rather than looking for opportunities to cooperate

39
Q

Importance of organisational structure in strategic implementation - REGIONAL STRUCTURE (pros & cons)

A

Grouping jobs / parts of the business over different regions

PROS:
- having jobs focused on one region may lead to much more in-depth market knowledge and better decision making

CONS:
- may lack resources
- hard and complex to allocate employees over different regions

40
Q

Importance of organisational structure in strategic implementation - MATRIX STRUCTURE (pros & cons)

A

When individuals work across teams and projects as well as within their own department or function.

PROS:
- Helps break down traditional department barriers –> improving communication and greater motivation amongst employees
- A good way of sharing resources across departments – which can make a project more cost-effective

CONS:
- Difficult to co-ordinate
- It takes time for matrix team members to get used to working in this kind of structure
- Team members may neglect their functional responsibilities

41
Q

Critical path analysis

A

CPA - a project analysis and planning method that allows a project to be completed in the shortest time possible

EST - when 2 or more activities meet, EST is always highest figure
LST - when 2 or more activities meet, LST is always lowest figure

42
Q

Critical Path analysis - Float time and critical path

A

Float is the duration an activity can be extended / delayed so that the project still finishes within the minimum time

Activities with a float of zero can’t be delayed or the whole project will be delayed too

Float Time = LFT - EST

Critical path is when EST and LST are equal with zero float

43
Q

Difficulties with strategic decision making & implementing strategy

A

Strategic decisions are unfamiliar

They are major decisions which involve high risk

Very high level of uncertainty

Strategic decisions may also be biased through a manager’s own perspective –> leading to flawed decision making

44
Q

Planned v Emergent strategy

A

PLANNED:
- the intended strategy
- influence by specific corporate objectives
- based on formal strategic planning (e.g. SWOT analysis)
- described in formal business plan

EMERGENT:
- the strategy that actually happens
- strategy responds to events as they arise
- often involves strategic and tactical changes
- no restricted by formal planning tools and methods

45
Q

Reasons for strategic drift

A

When the strategy of a business is no longer relevant to the external environment facing it

Reasons for strategic drift:
- business fails to adapt to a change external environment
- what worked before doesn’t work now
- complacency has set in –> often built on previous success
- senior management deny there is a problem

46
Q

Possible effect of divorce between ownership & control

A

Occurs when owners of the business don’t control the day-to-day decisions being made

47
Q

Corporate Governance

A

System by which companies are directed and controlled

Key responsibilities of BoD’s
- setting company objective and aims
- determining the strategy to achieve those aims & objectives
- providing leadership to put them into effect
- supervising the management of the business
- reporting to shareholders on their stewardship of the business

48
Q

Value of strategic planning - PROS v CONS

A

PROS:
- bases its plans on data –> avoids irrational & poor decisions
- provides a strategy that sets our for managers what the business is doing and how –> plan can motivate & give a sense of direction

CONS:
- external environment can change so fast that strategic plans may need reviewing regularly
- level of detail considered may need altering due to changing external environment

49
Q

Value of a contingency plan

A

Occurs when a business plans for possible but unlikely events

AQA A-level Business (10 decks)

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