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Exam Questions on External Change
Explain the impact of new competition on an organisation. (6 marks)
New competition could mean that an organisation will need to reduce the amount of staff employed.
This is due to the fact that new competitors will have better production techniques so they are more
efficient and are able to achieve more productivity and reduced prices so the existing organisation
may slowly be left closing stores in some areas. New competition may also mean that an organisation
may be left behind on the product market and will become unfamiliar to customers. This is because
other organisations have been able to come up with new products meaning that the existing
organisation starts to fade from customers minds leaving them at a disadvantage. New competition
could have a negative impact on an organisation as they will have fewer customers. Special offers
from the competing organisation will mean that customers will find it more beneficial and more
economical to spend their money where they will get deals meaning that the existing organisation
will lose out.
Describe the impact that a downturn in the economy can have on individuals within an
organisation. (4 marks)
A downturn in the economy could mean that individuals within an organisation may lose their jobs.
This would involve the organisation would either have to make redundancies or ask for voluntary
redundancies in order to keep within their budget and individuals would need to search for new jobs
so that they can make a living. A downturn in the economy could mean that individuals within an
organisation could be paid lower wages due to a lower national minimum wage or higher tax rates.
This involves employees working the same hours for the same money making them slightly more
irritable in the workplace and less willing to fully cooperate. It could also lead to employees leaving
the organisation in search of new jobs.
Identify three examples of external change and describe how they can impact on an
organisation. (9 marks)
One example of external change is when the government increase the VAT rate or tax bands. These
impacts the organisation as the organisation will generally have to pay more money for materials and
pay more money to run their business which means that it is necessary for them to make more profit
by charging more for products and services.
Another example of external change is when there are new developments in ICT. This impacts the
organisation as they will need to keep up with these developments by buying new machines, new
software or hardware or software for example. This means that it's necessary for the organisation to
make more money through products so that they can buy and implement these new developments.
A third example of external change is development in the transport industry for example a new
railway station or a new motorway. This impacts the organisation as they will be able to gain more
customers due to better links and employees may also find it easier to reach their workplace. This
means that its necessary for the organisation to expect better relationships with the public and
create the capacity for better trade with organisations.