unit 10

Question 1

causes of change

Answer 1

internal
external

Question 2

what happens when business environment changes

Answer 2

managers must change the way the business is run to suit the new circumstances

Question 3

what might managers do to adapt

Answer 3

for e.g. change staffing levels, location and product range, more expense on R&D

Question 4

internal factors of change

Answer 4

**change in leadership/management **(which might lead to changes in the organisational culture or structure of the business)
enhanced performance (could lead to expansion of the business in order to take adv of the profits)
poor financial performance - may lead to retrenchment
changes in staffing - (company might go through recruitment or retraining or outsourcing)
business growth - for example adapting product range
**type of business **- innovative - continually changing

Question 5

external factors of change

Answer 5

• new technology availability
  -changes in consumer tastes
  -economy slows (less disposable income - price reduce)
• legislation changes - government restrictions
• ethical / social views changes consumers
• changes in competition

Question 6

value of change

Answer 6

• necessary if the business wants to grow and stay competitive
• allows to take advantage of new effective ideas
  -bs may be forced to change in order to survive
• in fast paced market , technology advances change is essential
• without change business might fall behind competitors which could lead to insolvency

Question 7

incremental change

Answer 7

• incr change is gradual
• incremental change is usually the result of a strategic plan being put in place
• it often attempts to minimise disruption

Question 8

how does incremental change work

Answer 8

managers decide a timescale for the necessary changes and then timetable strategies for achieving them

Question 9

disruptive change

Answer 9

disruptive change is sudden
disruptive change forces firms to suddenly do things in a different way than usual

Question 10

what may disruptive change cause a business to do

Answer 10

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

Question 11

what is organisational culture

Answer 11

the way people do things in a company and the way that they expect things to be done

Question 12

what is a strong culture

Answer 12

organisational culture is strong when employees agree with the corporate values of the company

Question 13

what is a weak culture

Answer 13

where the employees of a company do not share the company’s values and have to be forced to comply

Question 14

advantages of having a strong culture

Answer 14

employees need less supervision - their behaviour tends to naturally fit in with company values
staff more loyal to business so staff turnover low
increases employee motivation so work is more productive

Question 15

what are the four types of organisational culture Handy identified

Answer 15

power culture
role culture
person culture
task culture

Question 16

power cultures

Answer 16

centralised structured
decision making is limited to small number of people even just one person
employees more likely to be resistant to change (dont have opportunity to give opinions on change)
might be resistant because they may not feel senior managers are in touch with day to day activities of the bs

Question 17

role culture

Answer 17

common in bureacratic firms where authority is defined by job title
employees do not get opportunity to get involved in decision making process
tend to have poor communication between departments
respond slowly to change (disadvantage in dynamic markets)
change quite rare
any change brought in will meet resistance employees not used to doing things differently

Question 18

person culture

Answer 18

common in loose organsations of individual workers (usually professional partnerships)
objectives defined by personal ambirions of individuals involved
firms have to ensure that individuals have common goals
decisions made jointly so employees likely to be comfortable and accepting of change
decisions on change can be difficult to make individuals will think what is best for themselves rather than the business

Question 19

task culture

Answer 19

place an emphasis on getting specific tasks done
small teams work together on a project then disband
may be conflict between teams for resources or budgets
culture supports objectives which are based around products
respond well to management by objectives
staff used to change and likely to be less resistant to change

Question 20

what are the forms of external growth

Answer 20

mergers
takeovers
ventures
horizontal integration
vertical integeration
conglomerate integration

Question 21

mergers

Answer 21

when two companies join together to form one company

Question 22

main motive for mergers

Answer 22

synergy - business after merger will be more profitable than all the business before merger
this is due to merged business generating more revenue or cos savings through economies of scale than indepdent business between them

Question 23

takeovers

Answer 23

when one business buys enough shares in another so that it has more than 50% total shares
controlling interest - buyer will always win in a vote of all shareholders

Question 24

hostile takeovers

Answer 24

when one public limited company buys a majority of the shares in another PLC against will of directors
this is possible because PLC shares are traded on the stock exchange and anyone can buy them

Question 25

ventures

Answer 25

small businesses or prokects that are set up by existing businesses in hopes of making a profit
often setup to try and meet needs that are not being met in the current market
involves alot of risk to business setting it up

Question 26

joint venture

Answer 26

when more than one business invests in a centure
bs share their resources but there is no change of ownership
more preferable as risk can be spread among businesses involved