3.11: The Factors and Resistance against Change in Business

Question 1

Describe three Internal Factors that drive change in a global environment.

Answer 1

Corporate culture: the beliefs, attitudes, views, opinions held in a workforce determine how receptive a business is to change
Management styles: autocratic leaders compared to a situational leader that seeks all views and is much more dynamic/adaptable
Business policies: policies need to remain up-to-date, relevant and applicable in the current business environment to inspire change

Question 2

Describe three External Factors that drive change in a global environment.

Answer 2

(PEST factors)
Legislative pressures: examples would be amendments to Fair Work Act 2009 that increased minimum wage. This forced firms to change by changing their wage policy
Economic climate: during a recession, firm may reduce staff numbers whereas during an economic boom, firms may expand operations, reduce cost of production due to high interest rates making imported inputs cheaper, and exporters may move production offshore where costs are lower
Social demographic measures: changes in consumer tastes, preferences, attitudes and values affect the pressure to change experienced by firms and can pressure groups can force firms to operate ethically

Question 3

What are the 4 reasons for resistance to change?

Answer 3

• financial costs
• managerial inertia
• cultural incompatibility in mergers / takeovers
• staff attitude

Question 4

Explain financial cost as a reason for resistance to change?

Answer 4

Resistance might be based on the real or perceived costs of change. A business needs to weigh up the costs and benefits of the change to calculate its long-term feasibility. Costs may include: new technologies, processes, equipment, staffing costs

Question 5

Explain managerial inertia as a reason for resistance to change?

Answer 5

Managerial inertia is the tendency of managers to continue on the business’s current path, preferring routines to stay the way they are. This may be due to the belief that the firm has saturated to its peak, a lack of initiative in the workplace, or an overall lack in skills.

Question 6

Explain cultural incompatibility in mergers/takeovers as a reason for resistance to change?

Answer 6

Firms have individual cultures, histories and values that clash due to different approaches to policies and procedures that come out of them. Employees may experience fear and uncertainty as most mergers or takeovers result in a reduction of staff. Language barriers can limit communication between the firms and increase the difficulty in making decisions which can also be made more challenging with varying customs, opinions, view and attitudes

Question 7

Explain staff attitude as a reason for resistance to change?

Answer 7

Fear of change or the unknown – feelings of being overwhelmed or powerless with organisational change and uncertainty. Self-interest and misunderstanding – staff may be concerned they will be made redundant or may have to undergo significant training. Attitude of mistrust – if employees don’t believe management can succeed, change is likely to fail.