3.6.1. Causes And Effects Of Change

Question 1

Internal causes of change

Answer 1

-Changes in organisational size
-Poor business performance
-New ownership
-Transformational leadership(revive performance, bring extensive change to aims, objectives, culture)

Question 2

External causes of change (PESTLE)

Answer 2

-Political change (policies, gov. spending)
-Economic change (adjust capacity to suit demand)
-Social change (lifestyle changes, anticipating change provides competitive advantage/steal market share)
-Technological change (new tech creates new markets etc)
-Legal change (legislations, tighter controls etc)
-Environmental change
-Changes in market (emergence of new competitors, changes in trends swifts demand)

Question 3

Possible changes to boost competitiveness via cost leadership

Answer 3

-Finding new suppliers
-Redesigning product to reduce cost of making it
-Boosting capacity utilisation via branch closures

Question 4

Possible changes to boost competitiveness via differentiation

Answer 4

-Redesign brand
-Rebrand product or service
-Adding extra features to product or service

Question 5

Effects of change on productivity

Answer 5

Desire to increase productivity thus reduce unit costs. This can be done via:
-Automation
-Updating tech
Should increase motii in action

Question 6

Effects of change on financial performance

Answer 6

Long term financial improvement vs short term pain
1.Reducing labour costs- redundancy payments
2.Lower unit costs- investment in new production robots
3.Improved revenue growth- increased advertising budget
4.better profit margins via increased price- cost of redesigning product