Unit 10 Flashcards
Reasons for change
External-pestle
Internal-performance-good=expand, poor=retrench
leadership-may change organisational culture or structure
Disruptive change+example
Forces firms to suddenly do things a different way, characterised by a shift in the underlying forces of an industry. e.g internet
Lewin’s force field analysis cons (3)
Identifies and evaluates driving/restraining forces of change. Ranks in importance.
- requires full participation to provide accurate info to be realistic
- may not cause a consensus. May cause a divide between people who oppose/support
- effectiveness depends on skill level of group who are doing it, there may be gaps in information etc
Drawbacks of change (4)
Cost
Time
Loss of focus-managers lose focus on core activities
Resistance (K&S)
Kotter & Schlesinger reasons for resistance (4)
Different assessments-understand reasons but disagree/have a better plan
Fear+misunderstanding-do not trust motives
Prefer things as they are-don’t like change
Self interest-worse off if change occurred..?
Kotter & Schlesinger overcoming resistance (6)
- Education+communication
- Participation+involvement
- Facilitation+support
- Negotiation+agreement
- Manipulation+co-optation
- Explicit/Implicit coercion
Manipulation+co-optation
Giving desirable role in change. For appearance, rather than contribution. Cheap and quick if other strategies are unsuitable/fail, but Unethical, can lose trust if seen as manipulator.
Explicit/Implicit coercion
Forcing employees-by risk of job loss, transfer or derived promotion. Fast but hurts trust etc. Risky as people resent being forced
Hofstede’s national culture (6 dimensions)
Power distance Individualism v Collectivism Masculinity v Femininity Uncertainty Avoidance Long term Orientation Indulgence v Restraint
Handy’s Organisational Culture (4)
Role-clearly delegated authority
Task-teams formed to solve tasks
People-people are superior
Power-centralised, fast d-m
Power culture pros cons (1,2)
+Centralised (quicker, expertise, overview)
- Struggle when growing to keep decisions making central (react slowly compared to comp)
- Employees resistant, don’t have a say
Good in Greiners creativity phase
Role culture pros cons (1,3)
+Clearly delegated roles of authority.
- Employees not involved and not used to doing things differently so resist
- Slow communication as more levels
- Silo mentality-don’t help other departments
Good in stable environment, or a country with high UAI
Person culture pros cons (1,1)
Objectives defined by personal ambitions.
+joint decisions, so employees are likely to be comfortable (no resist)
-decision making be hard to make due to self interest.
Task culture (2,3)
Focus on tasks in teams.
+respond well to objectives
+change is normal, as teams change (less resistance)
-conflict between teams for resource/budget
-confusing if too many products/projects
-training costs
Good for strategic drift as flexible.
Value of change (5)
Maintain CA Adapt to external environment Grow and compete more effectively Improve efficiency and productivity Improve HR relations
Flexible organisations
Respond quickly to external changes. Workplace is flexible
Knowledge and information management (KIM) and benefit and example
Organising, storing, sharing info so everyone can benefit from its use.
Allows more flexibility as info more accessible, easily respond to change or make decisions
Staff share lessons learnt to avoid same problems in future
Ways to be more flexible (7)
Part time Job sharing Flexitime Compressed hours Annual hours Telecommuting Zero hour contracts
Strategic drift
Strategy becomes less suited to environment making it no longer fit for purpose
Difficulties when strategic decision making (internal and external)
Pestle
Unforeseen circumstances
Competitors actions
Poor leadership
Poor allocation of resources
Resistance
Planned strategy vs Emergent strategy +example
Emergent strategy develops overtime
e.g viagra was intended to be for medical use
Pros cons of planned strategy (2,3)
Clear sense of direction Easily communicated Lacks flexibility Costly+Long Can be too detailed/unreasonable
Pros cons of emergent strategy (3,4)
+quick, cheap
+flexible, can respond to changes, use hunch, more creative and innovative (Avoid strategic drift)
+based on decisions of junior management, more up to date
- can cause mistrust due to changes
- unclear end goal (not motivating)
- can be hard for large companies as needs coordination (better for flat structures)
- ill prepared in terms of resources/time
Education + communication (K&S)
+shows need for change
- requires good relationship
- time and effort (short run?)
Participation and involvement (2,2)
+good when initiators don’t have all info
+reduces resistance
-can lead to poor solution if not managed well.
-time consuming
Facilitation & support
Expensive time consuming
Negotiation & agreement
+simple
-expensive e.g wage rises
critical path analysis
Identify the most efficient way of completing a project
Why CPA is needed
Projects are complex, high risk and sig investment or have narrow deadlines needed to be met
Info required for CPA (3)
List of activities
Duration
Dependencies between activities
CPA calculates
Critical path (longest path of activities to complete project) EST and LFT that each activity can start and finish without slowing down the project Float activities and critical activities
Float time formula
LFT-EST-Duration
Uses of CPA (2)
Minimise project time e.g shorten critical path by allocating resources from float activities or outsource
Prioritise tasks
Use JIT-improve CF
Disadvantages of CPA (3)
Time consuming
Estimates
Doesn’t show if project is good, or the costs of project so needs to be used alongside other tools
Obsession with critical path-shortcuts-quality issues
Organisational culture
The ways things are done, and expected to be done.
Strong culture and advantages
Strong-employees agree with values of company.
+require less supervision
+loyal (turnover low)
+motivation
Weak culture
Employees are forced to comply with values of business.
Define strategy
Plan for achieving corporate objectives
Examples of strategic planning tools (5)
Market mapping Stakeholder mapping Pestle Swot STP PFF
What does implementing strategy require? (3)
Leadership
Communication
Organisational structure
Benefits of strategic planning
Clear direction, communicated easily
Way of measuring performance
Efficient use of resources
More effective decision making
Drawbacks of strategic planning
Analysis may be inaccurate
Inflexible-employees may stick to plan as they think they have to
Corporate governance and why it’s needed
The system by which companies are directed and controlled. Needed due to the divorce of ownership and control
Responsibilities of directors in corporate governance
Set objectives
Lead
Manage risk (contingency plan)
Report to shareholders
Contingency planning and 3 reaons for it
Preparing for unexpected events-reduce panic, reduce impact, protect brand
Evaluation of contingency planning
Expensive, so not worthwhile to prepare for every possible thing that can go wrong
If not carried out, forced to make quick decisions.
Needs strong leadership to react and limit damage caused
Employees need to be trained to the contingency plan for it to work
Organic structure (3)
Informal
Flexible
More adapted to change (decentralised)
Mechanistic (3)
Formal+bureaucratic
Centralised
No perceived need to change, so greater resistance.
Power distance
Extent to which power and wealth is distributed and tolerated. High-accept hierachy without argument
Uncertainty avoidance
High-avoid risk taking to minimise uncertainty
Individualism v Collectivism
Extent to which people are expected to look after themselves rather than support each other. Personal achievements
Masculinity v Femininity
Masculine-highly competitive, focus on power and money
Femininity-focus on caring and quality of life
Long term orientation
High-society looks to future and accepts new ideas
Low-follows tradition
Indulgence v Restraint
Indulgent-allow people to satisfy desires
Restraint-regulate desires
4 types of organisational structure to implement strategy effectively
Functional
Product-based
Regional
Matrix
Functional organisational structures and how it’s good, and cons (1,1)
Organises staff by department.
+Each function works in area of expertise, so implementing strategy is easier.
-Each department can have own culture and priorities, can be hard to co-ordinate strategy across departments, poor communication
Product-based structures and pros and cons (1,1)
Organises staff by product, ran like a separate business
+good for implementing certain strategies for only one product
-duplication of roles-more efficient to have just one (rationalise)
Regional structure and when it’s used
Organise staff geographically, decentralised control to adapt locally to market demands
Used following a market development strategy where busines is expanding geographically
Matrix structures
Organise staff by a combination of factors e.g project and function, so they will report to their function manager and project manager e.g Operations manager and project B manager.
Pros cons of matrix structure
+ensures staff pursue clearly defined objectives
+encourages departments to build relationships
-conflict between project and department managers on how strategy should be implemented
Restructuring
Changing organisational structure of business
Main reason for restructuring
Maximise efficiency of decision making, communication and division of tasks.
How would a business in a fast changing environment restructure?
Decentralise to give more power and flexibility
How would a business restructure in a recession/hardship
Centralise to make quick decisions
What structure should a business use to be flexible and adapt to change?
Organic-less formal, decentralised, can adapt well to change
Benefits of flexible working (3)
Cost-less fixed costs+recruitment and training
Higher job satisfaction and moral for workers as can work flexibly
Larger pool of applicants
Drawback of flexible working (4)
Hard to manage-poor communication and teamwork as work at different times
Hard to manage change too
Loss of capacity if key employees reduce hours
Potentially less motivated from remote working e.g isolation, distraction at home
Strategic drift phases
Incremental change
Strategic drift
Flux
Transformational change
Incremental change & Strategic drift phases
Step changes by managers to fit in with external change
Rate of external change increases, managers continue step change but gap increases
Flux stage
Recognise issue, uncertain how to fix, competitive advantage lost, fallen behind trends
Transformational change
Either make a big change to keep up with external environment or face demise e.g Nokia, Kodak, Blockbusyer
Example of transformational change
Netflix was a DVD service, made a big change to streaming to fit external environment
How to avoid principle agent problem from corporate governance?
Financial incentives to align managers strategy to shareholders. e.g bonuses on share price or profits (Apple forced managers to hold shares for 5 years)
Transparency of information (public financial statements)
Where is contingency planning used most
In unpredictable industries e.g travel, airlines e.g strikes, terrorist threats, oil price rises (volatile)