3.6 Flashcards
Change management
Change management: Involves the process that ensures a business responds to the environment in which it operates. Three types
- Step Change
- Incremental change
- Disruptive change
Step change
Step Change: Significant and occurs rapidly
- Dramatic or radical change in one fell swoop
- Often required when a business has suffered from strategic drift
- Often involves significant alteration in the business
- Get over it quickly and decisively
- May require some coersion to overcome resistance
Incremental change
Incremental change: Change occurs over time in small stages
- Many small changes which take place as a business develops and responds to subtle changes in the external environment
- Usually involves little resistance
- Arises as strategy develops
Disruptive change
Disruptive change: Interrupts market as a whole
-This is a form of step change that arises from changes in the external environment
-Rapid improvements in technology are the main driver
- Challenges the ‘business model’ how goods are sold and bought
Causes of change
External:
- Takeover/Merger
- Political/Social
- Economical
- Technology
- Environmental
- Competitive
Internal:
- New leadership
- Communication
- Structure
- Finance
- Aims/Objectives
- Corporate culture
What is scenario planning?
- Preparing for unpredictable and quantifiable problems
- Preparing for unexpected and unwelcome events
- Aims to reduce the impact of an unforeseeable event and plan how the business will resume normal operations after the crisis
Why do scenario planning?
- Identifying what and how things may go wrong
- Understand the potential effects if anything goes wrong
- Devising scenario plans to cope with the threats
- Putting in place strategies to deal with the risks before they happen
Evaluating scenario planning
- Risks vary in terms of their significance to the business and likelihood
- Scenario planning is not required for every eventuality
- Risks of strategic significance cannot be ignored
Scenario planning
Planning (including expected responses) for unforeseen events
Risk management
Handing potentially dangerous events for a business
Trade offs
Often involve the loss or compromise of another opinion or factor
The higher the cost the lower the profit
But higher cost = better quality
Lower cost = higher profit
What is risk in business?
- Possibility of loss or business damage
- Threat that may prevent or hinder ability to achieve business objectives
- Change that a hoped-for outcome will not occur
Ways to deal with risk
- Ignore it (wait and see)
- Reduce probability of risk
- Share or deflect the risk (insurance etc.)
- Make scenario plans – prepare for it
- Treat risk as an opportunity – particularly if it also effects other competitors
Identifying risks using risk assessment
- Natural disasters
- IT systems failure
- Loss of key staff
Transformational leadership
When new leader such as CEO brings about change with the purpose of improving business performance
Impact of them on a business:
- Influence subordinates by motivating and inspiring them to help achieve goals
- Increase connection and identification between them and the subordinate
Identifying gaps and formulating new ideas
- Reduce burnout among their employees, incentives
