unit 10 Flashcards
causes of change
internal
external
what happens when business environment changes
managers must change the way the business is run to suit the new circumstances
what might managers do to adapt
for e.g. change staffing levels, location and product range, more expense on R&D
internal factors of change
change in leadership/management
enhanced performance
poor financial performance
changes in staffing
business growth
type of business
external factors of change
- 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
value of change
- 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
incremental change
- incr change is gradual
- incremental change is usually the result of a strategic plan being put in place
- it often attempts to minimise disruption
how does incremental change work
managers decide a timescale for the necessary changes and then timetable strategies for achieving them
disruptive change
disruptive change is sudden
disruptive change forces firms to suddenly do things in a different way than usual
what may disruptive change cause a business to do
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
what is organisational culture
the way people do things in a company and the way that they expect things to be done
what is a strong culture
organisational culture is strong when employees agree with the corporate values of the company
what is a weak culture
where the employees of a company do not share the company’s values and have to be forced to comply
advantages of having a strong culture
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
what are the four types of organisational culture Handy identified
power culture
role culture
person culture
task culture
power cultures
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
role culture
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
person culture
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
task culture
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
what are the forms of external growth
mergers
takeovers
ventures
horizontal integration
vertical integeration
conglomerate integration
mergers
when two companies join together to form one company
main motive for mergers
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
takeovers
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
hostile takeovers
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
ventures
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
joint venture
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
