Managing Change 3.6 Flashcards
what are 4 internal causes of change?
- changes in organisational size
- poor business performance
- new ownership
- transformational leadership
what are 7 external causes of change?
- changes in the market
- political
- economic
- social
- technological
- legal
- environmental
what are two approaches to change?
- step change - significant and occurs rapidly
2. incremental change - change occurs over a period of time in small stages (Kaizen)
what are the three times where business process reengineering happens? (BPR)
- happens when a business is performing badly
- happens when theres a dynamic change in the market (often in technology)
- happens if change in leadership/ takeover
why does kaizen need to happen?
- improve efficiency in production
- invest in research and development
- invest in market research
what kind of internal changes could a business experience? (4)
- size of business
- significant investment decisions
- change in strategic direction and corporate objectives
- structure could change - perhaps by delayering
what is a benefit and 2 negatives of a change in ownership?
benefit - remuneration happens
negatives - different culture views
- resentment from staff
what is the definition of a transformational leader?
leader who transforms the business which they work for
what kind of external changes could a business experience? (3)
- consumer trends change
- competitors actions
- government (legislation changes)
what does PESTLE stand for and what is it?
political, environmental, social, technological, legal, economic. key external factors that impact on business objectives and achievements
what are three possible effects of change?
- effect of change on competitiveness
- effect of change on productivity
- effect of change on financial performance
what is two ways competitiveness can be achieved?
- cost minimisation
2. high differentiation
what is the definition of downsizing?
rethinking staffing numbers and the organisational structure needed given that sales revenue has fallen
what are 5 internal signs that an organisational culture needs changing?
- productivity/ efficiency decrease
- dis-economies of scale
- tension between employees and managers
- high waste
- higher absenteeism
what are 4 external signs that an organisational culture needs changing?
- loss of contracts
- low market share
- low market value
- dont respond to changes in laws
what are 3 ways of ensuring change is successful?
- staff understand the need for change
- staff understand what the new, changed world will be like
- staff understand the plan from getting from A to B
what are the two points Ed Schein says that have to be considered when there is culture change?
- never start with the idea of changing a culture - start with the issues the organisation faces
- always think of the organisational culture as a source of strength. if change is needed, try to build on existing cultural strengths
what are 4 key factors of change?
- organisational culture
- change in organisational size
- time and speed of change
- Resistance to change
Describe the key factor of change: time and speed of change:
businesses operate in dynamic markets and must deal with change quickly. For some, change is good, keeping it fresh and moving forward. For others, changing too much can create a crisis for the business; stress, conflict and destruction - toxic culture
why may employees resist change? (5)
- no job security
- not used to culture change
- often brings new leadership
- worry about training - people may feel deskilled
- fear of impact on pay/ environment
why may customers resist change? (2)
- know brand identity and are loyal to it
2. could be worried it affects quality/ content of formulation/ design
what are Kotter and Schlesingers ways of overcoming resistance to change? (6)
- educate and communicate
- participation and involvement
- facilitation and support
- manipulation and co-option
- negotiation and bargaining
- explicit and implicit coercion
what are 5 ways businesses manage change?
- regular meetings between employees and management - ensure lots of communication - consultation
- incremental change - small changes slowly
- seek support from trade unions
- focus on positives/ business strengths - sell the vision
- ensure change aligns with current culture
what are 5 positive effects of change?
- help sustain a competitive advantage/ first mover advantage (FMA)
- aligns business strategy with evolving nature of customer needs and wants
- business can take advantage of developing technologies
- stakeholders gain from improved productivity and work environment
- change in organisational structure may enable a business to improve the effectiveness of its communication and decision making
what is the definition of disruptive change?
this kind of change happens suddenly, unpredictably and with substantial impact which shakes up the whole market
what are three meanings of risk?
- possibility of loss or business damage
- threat may prevent ability to achieve business objectives
- chance the hoped for outcome doesn’t occur
what is the definition of risk assessment?
a systematic process of evaluating the potential risks that may be involved in a projected activity or undertaking
what are three risks which can be identified through risk assessment?
- natural disasters
- IT systems failure
- loss of key staff
how do natural disasters affect a business and what can be done to limit impact?
affect any size of business. Affects manufacturers and distributors. To limit the impact try to have multiple suppliers/ network with competitors
how does an IT systems failure affect a business and what can be done to limit impact?
it has customer details, suppliers details and human resources information. To limit the impact have firewalls with high security
how does loss of key staff affect a business and what can be done to limit impact?
when a key figure leaves it can have major repercussions that organisations stakeholders. to limit the impact plan for loss of staff through succession planning
what are 6 approaches to planning for risk mitigation?
- risk acceptance
- risk avoidance
- risk limitation
- risk transference
- business continuity
- succession planning
what is risk acceptance?
accept there is an element of risk to every business venture
what is risk avoidance?
elimination of hazards, activities and exposures which can negatively affect an organisations assets
what is risk transference?
protection against risk
what is business continuity?
ability of business to continue after a disruptive incident
what is succession planning?
process for identifying and developing internal staff with potential to fill business leadership positions
what is the definition of contingency planning?
plan devised for an outcome other than the usual expected plan
what is the process of contingency planning? (ongoing process) (5 steps)
- recognise the need for a plan
- record as many crisis scenarios as possible
- search for ways to prevent a crisis
- formulate a plan for dealing with the crisis
- stimulate crises and operation for each plan
what is the definition of crisis management?
the way in which managers plan for and cope with an unexpected crises that poses a significant threat to the business
what is a crisis? (3)
- event which is unexpected
- threatens the wellbeing of a business
- can be linked to contingency planning
what are 6 examples of a crisis?
- physical destruction/unexpected event
- environmental disaster
- hostile takeover
- strike by workforce
- faulty/ dangerous product
- customer withdrawing order
how to handle a crisis? (4)
- appoint a crisis manager
- recognise crisis manager is likely to adopt an autocratic style
- do an objective assessment of the causes of the crisis
- decide whether the cause of the crisis will have a long/ short term effect
what are 4 positives of contingency plans?
- allows business to always be prepared
- presents business with a clear strategy of how to effectively mitigate risk
- saves time and resources
- helps allocate the resources
what are 3 negatives of contingency planning?
- cannot get all the possible risks so not completely prepared
- cost and time spent preparing for a crisis may not be worth the cost of the crisis
- depends on how well it is implemented - communicated to staff
what does contingency planning involve? (2)
- preparing for predictable and quantifiable crisis
2. preparing for unexpected and unwelcome events
what is the definition of contingencies?
uncontrollable events that are not anticipated for in thew business plan
when managing risk what are the three concepts?
- risk management
- contingency planning
- crisis management
what is the definition of risk management?
the identification and acceptance or offsetting of the risks threatening a business
what is the definition of business risk?
the possibility a company will have lower than anticipated profits or even experience a loss rather than taking a profit
what is business risk influenced by? (4)
- sales volume
- per-unit price
- competition
- government regulations
what are 7 different types of business risk?
- strategic
- compliance
- financial
- operational
- environmental
- commercial risks
- political and economic instability
what are the 5 steps of a risk assessment?
- identify the hazards
- decide who may be harmed and how
- evaluate risks and decide on control measures
- record your findings and implement them
- review assessment and update if necessary
what are four ways to deal with risk?
- ignore it (wait and see)
- reduce probability of risk
- make contingency plans
- adapt in order to maintain performance
