Theme 3 - Managing change Flashcards
Change management
The processes and procedures performed by managers to plan and prepare for changes, carry out changes and assess the possible effects of the changes on the business and its stakeholders
organisational culture
Businsesses need to understand their firms culture and align change with it
Open to change
- See it as an opportunity to learn
- Improving firm and ability to achieve objectives
- Adapts quickly to change
Reistance to change
- Routined, predictable cultures less likley to accept change
- Passivley or activley displaying resitance
- Will struggle to adapt to change
Sub-cultures
- Large firms have sub-cultures in different departments
- Makes it more difficult for change management as they may react differently to change
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Remain competitive
If different cultures move into different markets they may need to chain their culture to remain competitive
E.g. Power culture into larger market will need to increase production so will need to change to a task culture
Expenses of changing culture
- Costs of staff training as businesses will need to change the attitudes and behaviours of staff
Strong culture
- feel valued within the firm so will be more likley to embrace the change
Communication
Open cultures - clearer and effcient communication channels
Hierarchial cultures - will be limited and not accesible to all layers
Size of organisation
Large firms:
* Complex structures - slower and difficult communication people may not be fully understanding of change
* Makes it hard to motivate employees
* Complex deciison making process leading to delays and people may not want to change
* Have the resources required to implement change, financial, expertise, production
Small firms:
* One dominant leader will make it difficult for others within the business to implement change and consider alternative ways to implement change
* Dont have the resources to implement change finances, staff, spare resources
Why do businesses change their organisational size?
Grow organically as they sell more products or expand into] a new location
Grow inorganically - through a merger or a takeover
Positive and negative impacts of changing organisational size?
Positive:
* Reduced production time and economies of scale which will reduce unit costs of the business
* Businesses can pass the lower unit costs onto customers offering them low prices
* Gain a competitive advantage
* Business is growing and increasing its profits so shareholders will get higher returns
Negative:
* If unable to manage the increase in staff effectivley productivity will reduce as there wouldnt be enough machinery/resources for each new worker
* Increased production line and diseconomies of scale
* Harder communication, slow communication will lead to lower productiviy
* If business is reducing its size investors may choose to not invest or sell their shares as they lose confidence in the business
* Cash flow needs to be managed as the business grows otherwise businesses may overtrade and not be able to afford day to day costs of the business
Decreased organisational size?
Business unergoes a de-merger
* Lose eos
* Reduced competitiveness due to production costs rising which will rise selling price
* Reduction in profit = shareholders get less dividends
* Businesses may need to sell assets or make staff redundancies to reduce costs and increase profits and remain competitive
* Redundancies demotivate staff
Change in ownership
- Can bring signifcant change to overall aim and objectives of the business
Reasons for change in ownership?
- Transition from soletrader to partnership or limited company
- LTD - PLC
- Retirement - sell business
- Merger takeover
- Management buyouts (when management buy majority of shares to take control of the whole business)
Positive and negative impacts of change in ownership?
Positive:
* Economies of scale - new owners increase investment in machinery ir recruitment of staff which leades to increased production levels
* Shareholders benefit from eos as they get higher dividends and the price of share goes up = increased value in their investment
Negative:
* Dis economies of scale could occur following a maeger or takeover due to culture clashes between businesses
* Growth isnt managed - reduced competitvness as would have to increase prices and prices of shares
Business continutity
A plan for a business to continue operating after a serious incident
Transformational leadership
The ability to implement a vision through radicial policies and stratergies to bring about a positive change
Contingency plan
A course of action designed to help a business respond successfully to a major future event that may or may not happen
Risk acceptance
Where the full cost of mitigation is greater than the cost of the risk itself. This is often the case for small businesses
Risk assessment
Identifying and evaluating the potential risks that may be involved in an activity that a business proposes to undertake, ensuring compliance with health and saftey legislation
Risk avoidance
This is the opposite of risk acceptance it could involve ceasing to follow a particular action altogether for example
Risk limitation
This is the most common risk management stratergu used by businessess e.g. a company accepting that data storage may fail and avoiding a long period of failure by having back ups
Risk mitigation
Identify assess and prioritise risks and plan responses to deal with the impact of these risks on the operation of the business
