section Thirteen - Managing Change - Causes of Change

Question 1

What are internal factors causing firms to make changes?

Answer 1

• A change in leadership/management often leads to further changes. If the director of a company leaves or is replaced, the new director may have different ideas about how the business should be run, which could lead to changes in the organisational culture or structure of the business.
• Better than expected performance could lead to a decision to expand the business, in order to take advantage of the increased profits. Poor financial performance may lead to changes such as retrenchment, i.e. cutting down or reorganising in order to save money.
• If there are changes to the staff, it could mean that the business no longer has the required skills and further changes need to be made. The company might go through recruitment or retraining, or outsource their work.
• Business growth can lead to other changes. For example, a business expanding into international markets may have to adapt its product range to match the needs of customers in other countries.
• The type of business can influence the amount of change. For example, if a business is innovative, it may keep coming up with better methods of doing things, so the business may continually change to use these new methods. More traditional companies might prefer to stick to the old, tried and tested methods.

Answer 2

• The availability of new technology can cause change. Businesses might change their production methods if new technology means production can be faster or cheaper.
  New technology can also lead to shorter product life cycles - companies have to change and update their products frequently if they want to stay ahead of the competition.
• If consumer tastes change, the business might need to alter its product range to fit in with changing demand.
• If the economy slows, people will have less disposable income, so product prices may need reducing.
• Changes in the law can affect the way businesses are run - e.g. government restrictions on pollution may force businesses to alter their methods of production or change to a local supplier.
• Changes in the ethical views and social awareness of customers may result in companies purchasing ethically sourced products from fair trade suppliers.
• Changes in competition can result in a business losing a lot of its market share for particular products - they may need to act to regain their market share or prevent further losses.

Question 3

Explain why incremental change is gradual.

Answer 3

It’s usually the result of a strategic plan being put in place, and often attempts to minimise disruption.
Managers decide a timescale for the necessary changes and then timetable strategies for achieving them (e.g. training, closures, product development, promotional activities and all that sort of thing).

Question 4

Explain why disruptive change is sudden.

Answer 4

Disruptive change forces firms to suddenly do things in a different way to usual. They may have to close or sell off subsidiary companies, spend heavily on promotions to raise customer confidence or totally restructure the way the firm’s organised.
When you think of disruptive change, you usually think of a negative event that makes customers suddenly go elsewhere. However, it’s also possible for customer demand to increase and force the company to expand even though it wasn’t planning to.

Question 5

How can change be in between?

Answer 5

Sometimes, the government gives plenty of notice that they’re going to change the law, so that businesses can plan ahead and put a strategy in place.
Sometimes governments change the law suddenly, e.g. in response to a health scare.

Question 6

Explain Kurt Lewin’s concept of Force Field Analysis.

Answer 6

1) Kurt Lewin developed a concept called
Force Field Analysis to help understand change in different situations.
2) A diagram is drawn (see right) to show the plan, the forces supporting the plan, and the forces opposing the plan.
3) After the forces are written down they are numbered to show how significant they are, from 1 (least) to 5 (most).
4) The numbers are added up to show the total force for and against the plan.
5) The analysis can be used to help decide whether the plan should go ahead.
Alternatively, it can help managers work out how forces could be strengthened or weakened.

Question 7

Fill in the blanks for the Force Field Analysis of a plan to invest in new manufacturing machinery.

Answer 7