• Change in management style
• Change in business ownership
• Introduction of new technology
• Change in Business size
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What are the External causes of change?
• Introduction of new technology
• Labour market
• Changes in the economic conditions
• Change in consumer tastes
• New legislation
• Competition
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What are the different ways a business can grow?
Organic growth
Inorganic (external) growth
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Organic growth
• Involves expansion from within a business. Organic growth builds on the business’ own capabilities and resources. (For most businesses, this is the only expansion method used.)
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Methods of organic growth
- Developing new product ranges
- Launching existing products directly into new international markets (e.g., exporting)
- Opening new business locations (either in the domestic market or overseas)
- Developing distribution channels
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Benefits of organic growth
Less risk as the business is expanding in something they know about and are financing it with their own profits.
Less likely to to disrupt workers as they're already experts in the area.
Management style, culture and ethics can be maintained and controlle
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Drawbacks of organic growth
Growth achieved may be dependent on the growth of the overall market (therefore if the market is not growing, the business is restricted to increasing its market share or finding a new market to sell products to)
Hard to build market share if the business
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Inorganic (external) growth
Involves one business acquiring control of another business in a way to grow the business
(used usually to increase market share, rapidly grow the business
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Methods of inorganic growth
Merger or (hostile) takeover
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Benefits of inorganic growth
More chances to increase market share+market share and assets increase when the 2 firms come together
New skills and expertise
rapid growth
less competition as more market owned
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Drawbacks of inorganic growth
May require additional management as firms could be from different markets.
Riskier due to the potential of resistance from stakeholders.
Harder to control
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Why is inorganic growth preferred by some businesses?
• The existing products of the business are in the later stages in its life cycle, which makes it harder to grow organically
• The business (in particularly its management) lacks expertise or resources to develop organically
• Growing quickly is a top pri
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What unplanned changes may affect a small business in the future?
• Unplanned change occurs in response to a shock to the business
• Often unstructured and under-resourced and could be hard to deal with. However Contingency planning taken out by the firm should assist in minimising the effects of an unplanned crisis.
•
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What are the effects of change on business?
Shorter product life cycles.
Diminished brand loyalty.
Development of new products.
Changes in production methods.
Retraining the workforce.
Flexible workforce.
Raising costs for business (legislation).
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How should businesses respond to change?
Prepare and train employees on how to respond to this change.
Focus on the impact this change may have had.
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Negotiated total package
• Managers and workers negotiate the way in which change will be implemented, thus the change is based on an agreement from all workers and management (this may act as a constraint on the change as would take a long time to get everyone to agree on it). –
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Negotiated Piecemeal Initiatives
• Managers and workers will consult and agree on various changes as they become necessary (e.g. new shift patterns)
• Gradual and negotiated at each stage.
• No overall agreement or coordinated process as is in place for the negotiated total package
• Pro
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Imposed piecemeal initiatives
• Managers plan and implement changes in order to solve particular problems
• Each piecemeal change may be aimed at a different objective (different to total as total works towards one big objective)
• Pros- saves time and problems being solved by manage
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Imposed total package
• Senior management plan and introduce major change without the consultation of the workforce.
• May occur when methods 1 and 2 have failed or when there are rapidly changing external factors that need to be responded to quickly.
• Pros- rapid
• Cons- Li
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Issues of implementing change
STAKEHOLDER RESISTANCE
Employees- fear of the unknown.
Suppliers- may have to adapt for the business (may have to change to j.i.t system).
Consumers- may have to pay more and may go and buy from somewhere else.
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Lewins 3 step process on how to implement change
1) Unfreezing- create motivation for change, by making employees aware this change is necessary.
2) Transition- could be a difficult period as workers are now adjusting to new jobs ad roles. Communication n this stage is VITAL for success
3) Refreezing- w
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Other cards in this set
Card 2
Front
What are the External causes of change?
Back
• Introduction of new technology
• Labour market
• Changes in the economic conditions
• Change in consumer tastes
• New legislation
• Competition
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