3.10.1 Managing change

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    3.10.1 Managing change

    Causes of and pressures for change

    Organisational change:

    • For organisations, the last decade has been fraught with restructuring, process enhancements, mergers, acquisitions, and layoffs – all in hope of achieving revenue growth and increased profitability
    • While the external environment will continue to play a role in an organisations ability to deliver goods and services, the internal environment within the organisation will increasingly inhibit it from delivering products required to meet the demands of the marketplace unless it is able to adapt quickly

     

    Causes and types of change:

    • Internal
    • External
    • Incremental
    • Step
    • Disruptive

     

    Internal Causes of Change = this is change caused by decisions taken by the business itself

    • It includes restructuring – this usually involves changes to the capital structure of the business to reduce the amount of debt, as well as reductions in the scale and scope of the business’ activities (e.g. closing down business units)
    • It also includes delayering – this involves removing one or more layers from the organisational hierarchy – the aim of which is usually to reduce costs and improve decision-making and communication through a flatter organisational structure
    • New leadership is also included in this – the arrival of new leadership is often followed by a change in business strategy and subsequent changes to the products and markets in which a business operates and how it competes. An attempt to change the organisational culture is also frequently a feature of change instigated by new leadership

     

    External Causes of Change = these are linked to changes in the external environment facing all businesses or businesses in specific markets and/or locations (link to the PESTLE analysis)

    • Social trends/attitudes: for example the growing resistance by consumers to businesses using single-use plastic in products and packaging
    • Economic conditions: for example the economic uncertainty created by Brexit or the growth of protectionism in developed economies
    • Laws/regulations: for example changes to minimum pay requirements (National Living Wage), data protection (GDPR) and restrictions on advertising & selling
    • Technological advances: a significant source of external change, particularly through the creation of new business models (e.g. streaming) to challenge existing, established business models

     

    Incremental Change = these are the many small changes that businesses make day-to-day as management respond to opportunities and threats

    • This refers to efficiency and sustainability improvements in a company’s processes, operations, and supply chains
    • They usually involve relatively little, if any, resistance to the changes made
    • These changes make day to day management more efficient
    • Example = small and continuous changes to the quality of a product and the quality process it undertakes

     

    Step Change = these are the more dramatic or radical changes which management make

    • They are often triggered through the arrival of new senior leadership and/or when it is recognised that the business is suffering from strategic drift
    • Step changes are substantial – they often involve significant alteration in the business’ activities and require a well-organised change management process to enable them to be made successfully

     

    Disruptive Change = this is a form of step change that arises from changes in the external environment

    • Thus is business changed and challenged fundamentally
    • It impacts the market as a whole, challenging the established “business model”
    • Rapid improvements in technology have been a leading driver of disruptive change since technological innovation provides new ways of delivering goods and services as well as reducing barriers to market entry

     

    Lewin’s Force Field Model = this is an important contribution to the theory of change management – the part of strategic management that tries to ensure that a business responds to the environment in which it operates

    • It provides an overview of the change problems that need to be tackled by a business, splitting factors into forces for and against change
    • Change is the result of dissatisfaction with present strategies (performance, failure to meet objectives etc)
    • Change doesn’t happen by itself – it is essential to develop a vision for a better alternative
    • Management have to develop strategies to implement change
    • There will be resistance to change – it is inevitable, but not impossible to overcome

     

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