3.6 Flashcards
Causes of change
1- changes in organisational size
2-poor business performance
3-new ownership
4-market and external factors
1-Changes in organisational size
When the business grows in size eg. Expanding abroad
Impacts:
-longer chain of command due to more employees
-hard to maintain company culture
-can lead to economies of scale
-morale and productivity may decrease
-increased labour and training costs
2-Poor business performance
When a business experiences poor sales and profits
Impacts:
-reduce competitiveness
-business may need new objectives and direction
-can negatively affect productivity and efficiency
-business needs t9 take necessary steps to improve performance
-share value may decrease
3-new ownership
Can be if a PLC becomes a LTD or if there has been a merger or takeover
Impacts:
-can be clash of cultures
- aims and objectives can change
-may be role duplication so redundancies needed
-communication issues
-customers may face change in quality of products
4-market and external factors
May be due to new entrants in the market, or expansion into EU
Impacts:
-businesses may need to change corporate objectives and create new objectives
- may respond by increasing r and d and introducing more innovative products
Effects of change
1-competitiveness
2-productivity
3-financial performance
4-internal stakeholders
5-external stakeholders
1-competitiveness
Businesses need to be aware of competitors actions before undergoing change
-need to continuously invest in r and d and bring out innovative products
-expand into new and growing markets
2-productivity
A business undergoing change may need to:
Invest in machinery and equipment
-change production methods
-training-to meet new technology used
3- financial performance
A business undergoing change may :
- budget
-produce cash flow forecasts
-try raise extra capital
4-internal stakeholders
-employees may be unsure about future
-managers- worries about duplicate roles and redundancy
-can see change as positive with opportunities
5-external stakeholders
-shareholders may not invest during a period of change
-customers may be more satisfied- new products and improved quality
-suppliers can negotiate
Key factors in change
For change to be successful there needs to be good change management- mindful of the business and any stakeholders affected
It is important when change happens to make sure of:
- staff understand the need for change
-staff understand what the change is going to look like
-staff understand the plan for change
Human issues get in the way of successful change:
-leaders and employees may conflict on what motivates them
-
Organisational culture:
.to successfully implement change leaders need to understand the culture of the organisation and work to align changes with it
-the culture can either be open or resistant to change - open if its innovative, resistant if its routine work
-how effectively change is communicated is related to the culture
-strong culture- likely to embrace change
-weak culture- resist change
.to successfully implement change leaders need to understand the culture of the organisation and work to align changes with it
-the culture can either be open or resistant to change - open if its innovative, resistant if its routine work
-how effectively change is communicated is related to the culture
-strong culture- likely to embrace change
-weak culture- resist change
Size of organisation:
Affects the ability to implement change
-larger organisations-complex structure- can be slow and difficult communication -hard for everyone to follow
- smaller organisations- one dominant leader, may be hard to involve everyone
may also lack finances, skills, resources
Pace of change a
-incremental- gradual changes made over time
-disruptive- sudden and forces a quick response
-too fast- creates resistance
Workers may get overwhelmed
May not be planned out properly
May be difficult too communicate-lead to misunderstandings
Too slow:
-can result in lack of innovation
- no interest or engagement
Need to find a pace which is appropriate for the situation and take into account needs of stakeholders
Resistance to change
