BUSS4 - Change Notes

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BUSS4 ­ Change
3 main internal causes of change are:
Organisational Size
New Leaders/Owners
Poor performance
Growth is seen as natural development for a company. It provides benefits and
risks, but it enables companies to survive or make profits, by taking advantage
of economies of scale and remain competitive.
Organic growth
"When a firm expands its existing capacity by extending its premises, instead of
integration with another firm" (INTERNAL GROWTH STRATEGY)
Pursued for a number of reasons:
Product is not fully established yet
Firm needs to gain experience and ensure problems are ironed out
Spread costs over a longer period of time
No suitable acquisitions available
Organic growth is financed by retained profit, borrowing or attracting new investors.
This means the process tends to be slow but carries smaller risks.
"Where two or more firms agree to come together under one board of directors"
Pursued for a number of reasons:
Increase combined profit
Achieve objectives
Fastest way to achieve growth
But given the problems of integrating two separate organisations, it can be risky.
3 types of Integration:
VERTICAL ­ firms in the SAME INDUSTRY but DIFFERENT stages of the
HORIZONTAL ­ firms operating in the SAME INDUSTRY and SAME stage of
"Where one firms buys a majority shareholding in another firm; full management
Pursued for a number of reasons:
Fastest way to achieve growth
Increase profits
Achieve objectives

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But it can be risky, due to the problems of integrating two separate organisations
Reasons for Takeover:
Companies entering a new market may not have the necessary expertise
Speed of growth is a high priority
Brands are expensive to develop in terms of time and money
Exploit any patents owned
Market value is considerably less than its assets value
In order to succeed:
Deliver better returns together (synergy)
Need to decide which partners culture will prevail.…read more

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Managing Structures and hierarchies ­ Firms may alter their structure to
change the span of control so that new authority and departments are
More delegation ­ Original owners will take on more of a managing/leading
role. Professionals will be recruited to take on growing specialist
responsibilities. An effective management team will need to be created.…read more

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The drawbacks of floatation are that the company is answerable to shareholders, and
investment analysis will scrutinise the company. Often shareholders are only interested
in short term, quick profits, therefore the companies are under pressure to generate
record profit levels year on year.
From Public to Private Limited Company
The advantages include more privacy and less pressure on management, and can
therefore concentrate on the longer term view rather than short term profit levels.…read more

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Internal Environment ­ Review different functional areas, to review how
successful it has been and the key resources it needs. This will allow the
business to take advantage of opportunities.
External Environment ­ Makes use of PESTLE analysis and Porters Five Forces
SWOT Analysis ­ Strengths, Weaknesses, Opportunities and Threats.
Strategic Choice ­ identifies a range of options to gain a competitive advantage
­ Porters generic strategies
Strategic Implementation ­ Strategy into effect, translated into policies, rules,
procedures and targets.…read more

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Finance ­ Immediate cash expenditure
Operations ­ Customers' needs still need to be met, just in time
Human resources ­ direct leadership to make quick decisions. Communication
must be direct and quick. External communication should be truthful and
Can involve high numbers of highly qualified staff
Like all insurance, reduces the risk, but waste of money if nothing goes wrong
Risk management
Business is full of risk. A reputation can take years to restore because of the
"snowball" effect which exaggerates the problems.…read more

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Improved morale but slow
Where does the management lie? Who has control?
Leaders take a hands off approach ­ minimal input
Leaves the running of the business to the staff
Delegation lacks focus and coordination
Failure to provide a successful framework
Freedom for staff ­ creative, show initiative
Insecure, no feedback
Leaders don't understand their responsibilities
Factors influencing Leadership Style
Company Structure ­ span of control, type of structure
Particular situation ­ Autocratic work best in time of crisis, democratic in a
stable situation.…read more

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Organisational Culture ­ "Unwritten code that affects the attitudes and behaviour of
staff, approaches to decision making and the leadership style of the management"
Types of Organisational Culture
Allows firms to differentiate, have a sense of identity, how to behave and help
everyone interpret and understand how to act in the organisation.
A strong culture is internally consistent, clear what is expected and how people should
behave.…read more

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Not always possible to collect every piece of information
Organisational rules, culture and attitudes might prevent optimal decision
making being made anyway
Different approaches to Decision Making
Decision making in any business is very important, and includes elements of risk.
Careful analysis of the balance of risk and reward should be carried out.…read more

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Predictability ­ Hunch may be best in an unpredictable situation
Character of the person/culture- A risk taker is more likely to make hunches
Decision Trees
Decision trees work out the probability of different consequences and the
financial outcomes estimated. Calculations can be made to determine the best
option for the business.…read more


oli rebeiro

This is the best information i have seen on these topics all day!  I rate it 5/5. Thanks for the help Mr Mannix

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