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Business Component 3 > Change > Flashcards

Change Flashcards

1
Q

Give impacts that occur when a firm grows and the owner becomes the manager

A

•Firm:

  • hierarchy structures become more complex
  • process of management becomes more complex

•Staff:

  • lose direct contact with owner
  • jobs become more clearly defined

•Customers:

  • greater choice of stores to buy from
  • lose direct contact with owner
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2
Q

Define management buyouts

A

Managers of a firm buy out the shareholders in order to gain ownership & control of firm

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3
Q

Give reasons why management buyouts May occur

A
  • large firm may sell off small section to raise cash, refocus firm or get rid of unprofitable section
  • owners of a family firm might sell in order to retire or pursue other things
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4
Q

Where does the finance come from for a management buyout?

A
  • managers personal funds
  • selling shares to employees
  • loans by merchant banks or venture capitalists
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5
Q

What are the rewards of management buyouts

A
  • employees gain more motivation and more sense of personal responsibility
  • clearer objectives cos no owner/manager conflict
  • firm might be a success
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6
Q

What are risks/problems of management buyouts?

A
  • if it’s unsuccessful, personal losses felt by new owners & venture capitalists
  • management buyouts often have limited access to capital which affects likelihood of success
  • they’re often accompanied by rationalisation & job losses in order to improve financial performance
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7
Q

Give some points of evaluation of management buyouts

A
  • managers are not real risk takers and workers jobs may have disappeared if there has been no management buyout
  • workers may be more at risk with a management buyout than if the company had been purchased by a large organisation
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8
Q

Why won’t staff readily accept change

A

Because people like their routine and like to stick to it, they are creatures of habit and like security and certainty

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9
Q

How can a firm help staff accept change

A
  • involve them in decision making
  • improve communication
  • consider individual concerns
  • recruit/transfer/train in good time
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10
Q

Give the 4 main types of change and examples of each

P.E.S.T

A
  • political=brexit
  • economical=recession
  • social=immigration
  • technological=artificial intelligence
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11
Q

Give 3 examples of internal causes of change

A
  • changes in management style
  • change in business side
  • improved/worsened firm performance
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12
Q

Give 3 external causes of change

A
  • new legislation
  • globalisation
  • changes in consumer tastes
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13
Q

Give 4 things that must be done to manage change successfully

A
  • anticipate apparent threats & plan to overcome these
  • consider resources and staff
  • consider people involved and plan actions required
  • what do people require from their work?
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14
Q

Why may a firm wish to restrict business growth

A
  • may want to maintain culture of a small business
  • firm will be more complicated to manage as it gets bigger
  • may not want to put too much strain on their cash flow position
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15
Q

What are the factors that define how easy it is for a business to attract the finances needed to grow?

A
  • business plan must be realistic
  • previous reputation of firm and its management
  • type of ownership of firm e.g ltd or plc
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16
Q

Explain the sources if internal finance used to grow a firm

A
  • retained profits
  • owners capital
  • selling assets
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17
Q

Explain how external funding is raised for different sized businesses

A

•Small:

  • limited opportunities
  • loans from banks
  • venture capitalists

•Medium:

  • limited opportunities
  • stock exchange if turned into plc

•Large:
-mostly plc’s so can use stock exchange in multiple countries

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18
Q

Why must firms manage cash flow during a growth period

A
  • must still be able to pay day-to-day expenses

- fast growth increase risk of over trading so run risk of going bust before getting paid by customers

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19
Q

Why might a private limited company be reluctant to become a public limited company

A
  • threat of takeover
  • lose control of firm in decisions
  • risk of diseconomies of scale
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20
Q

Give 5 problems that a national business may have when it become an international business

A
  1. Different needs/wants in different countries
  2. International competition
  3. High recruitment & training costs
  4. Exchange rates
  5. Different legislations in different countries
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21
Q

Explain how and why organisational structures must change when growth occurs

A
  • goes from informal to formal as new departments are created with department managers
  • more precise jobs are created
  • goes from flat to hierarchal
22
Q

How and why must managers delegate more during growth?

A
  • firm gets more complicated so departments must get less isolated-> new communications systems must come in
  • possibly start delayering
  • emphasis on team work
23
Q

Why do managers need training to cope with growth

A
  • takes time for managers to change attitudes and learn to take ‘hands-off’ approach if used to being autocratic
  • need to learn time management to cope with added pressures
24
Q

Management must keep control of a growing business. How do they do this?

A
  • good planning systems
  • budget/target set
  • use management information systems
  • use management by objectives
25
Q

Why do communication systems become more complicated in a larger organisation

A

Because things need to go through more departments and people, there are more chains of communication

26
Q

Define Storey’s 4 different approaches to managing change

A
  1. Total imposed package = telling employees as an executive decision by management without any negotiation
  2. Imposed piecemeal package = change imposed gradually, still not negotiated
  3. Negotiated total packages = use negotiation with staff, change applied straight away
  4. Negotiated piecemeal package = gradual implementation of change through a series of negotiations with staff
27
Q

Give ads/disads for Storey’s imposes piecemeal package approach to managing change

A

•Ads:

  • staff eased into decision
  • managers have time to plan change

•Disads:
-staff still have no say in decision

28
Q

Give ads/disads for Storey’s negotiated total package approach to managing change

A

•Ads:

  • staff motivated as get a say
  • business keeps staff happy

•Disads:

  • firm may not achieve objective
  • change could affect business path
  • managers may be reluctant to lose control
29
Q

Give ads/disads for Storey’s total imposed package approach to managing change

A

•Ads:

  • firm will complete objectives quick
  • decisive change for firm

•Disads:

  • decreased motivation for staff
  • supplier may reject change
30
Q

Give ads/disads for Storeys negotiated piecemeal package approach to managing change

A

•Ads:

  • staff can gradually get used to change
  • decreased union pressure

•Disads:
-can not complete their clear vision

31
Q

Give an overview as to what Kurt Lewins forcefield analysis is

A

It provides an overview of the change problems that need or be tackled by a firm, splitting factors into forces for and against change. Says a degree of resistance is normal since change is disruptive

32
Q

Give internal & external causes for resisting change

A

•Internal:

  • poor efficiency
  • lack of innovation
  • change of leadership

•External:

  • customer demand
  • competition
  • tax and laws
  • political climate
33
Q

What can Lewins force field analysis be used to do?

A
  • investigate balance of power involved in an issue
  • identify key stakeholders in an issue
  • identify opponents and allies
34
Q

Explain Lewins force field analysis in more detail

A
  • there are forces driving change and forces resisting it
  • where there is and equilibrium between two forces = no change
  • in order for change to occur, driving force must exceed restraining force
35
Q

Explain Kurt Lewins 3 stage model for change

A
  • know as ‘unfreeze-change-freeze’
  • used to understand/manage organisational change
  • basic analogy if changing the shape of a block of ice
36
Q

Explain each of the 3 stages in Lewins 3 stage model

A

•Unfreeze:

  • determine what needs to change
  • create need for change
  • manage and understand doubts and concerns

•Change:

  • dispel rumours
  • empower action
  • involve people in process

•Freeze:

  • anchor changes into culture
  • develop ways to sustain change
  • provide support and training
37
Q

Give ads/disads of the unfreeze stage of Lewins 3 stage model for managing change

A

•Ads:

  • achieve goals and aims
  • change way it operates

•Disads:

  • shareholders may not want change
  • will affect motivation if carried out poorly
38
Q

Give ads/disads of the change stage of Lewins 3 stage model for managing change

A

•Ads:

  • keeps staff motivated if they know what’s happening
  • communication

•Disads:

  • may not adjust to change
  • may not go exactly as planned
39
Q

Give ads/disads of the freeze stage of Lewins 3 stage model for managing change

A

•Ads:

  • goals should be achieved smoothly
  • staff know exactly what’s happened

•Disads:

  • staff may still not like new change
  • firm may be worse off
40
Q

What are the 4 main types of organisational culture according to Charles handy

A
  1. Power culture (web)
  2. Role culture (formal hierarchy)
  3. Person culture (cluster)
  4. Task culture (matrix)
41
Q

Explain the power culture that Handy put forward

A

Organisations where decision making authority is limited to a small number of people. Objectives reflect wishes of those at the top. Best structured as a web - depends on central power source. Often in small firms. Matches up with autocratic style. Few layers of hierarchy

42
Q

Explain the role culture that Handy put forward

A

Bureaucratic forms where authority is defined by job title. Tend to avoid risk for fear of failure so develop cautious aims and objectives. Can lose out in long run. Often fail to exploit opportunities before competitors do. Best suited to formal hierarchy. Role/Job description is often more important than person who fills it. Tasks clearly defined. Clear chain of command. Position power is major source of power. Paternalistic style of leadership

43
Q

Explain the person culture that Handy put forward

A

Loose organisations of individual workers. Objectives defined by personal ambitions of individuals involved. Minimal structure. Organisation exists simply to assist as administrative back up for star performer individuals. Linked to laissez-faire style of leadership

44
Q

Explain the task culture put forward by Handy

A

Places emphasis on tasks/getting things done. Job/project orientated. Gets small teams together to work on project then disbands them. Supports objectives based around products. Respond well to management by objectives. Works best with wide spans of control. Linked to democratic style of leadership with delegation of responsibility

45
Q

Outline Ryan Cooks change management clock

A

Provides a structured approach for diagnosing the scale of change a business faces and the cultural gap that exists between its current and desired position. The 6 following steps can be used as framework for tackling any change management case study/exam question:

  • causes for change
  • Handy
  • analyse existing position
  • new position
  • gap analysis
  • execution/implementation
46
Q

Explain the causes of change step in the change management clock

A
  • investigation into internal and external causes of change
  • typical external factors = intensity of rivalry (porter
  • internal factors harder to spot as I’m an outsider
47
Q

Explain the Handy step in the change management clock

A
  • consider existing culture that prevails within organisation and if having positive impact on firm
  • if aims and objectives derived from the existing culture are incongruent with expectations of market, cultural change is likely/necessary
48
Q

Explain the analyse the existing position step in the change management clock

A
  • use porters 5 forces model

- conduct force field analysis using Lewins model

49
Q

Explain the new position step in the change management clock

A

-what is the new position the firm is attempting to move to?

50
Q

Explain the gap analysis step of the change management clock

A

Use two previous steps to find the gap of things firm find themselves faced with to reach change

51
Q

Explain the execution and implementation step of the change management clock

A
  • recommendations for how a firm can achieve desired change
  • consider likelihood of change being successful
  • comment on extent to which change may be achieved

Business Component 3 (6 decks)

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