(Draft) Business - 3.10

A-level Business AQA Managing Change

causes for change (x5)

1. a need to replace and update current technology

2. number, nature and quality of human resources in a business e.g. skills, motivation etc.

3. issues about the organisational structure including lines of communication, management hierarchies etc.

4. growth vs retrenchment

5. objectives and vision of internal stakeholders

external change

changes in the external environment of a business or its competitive environment (must ensure the business can respond quickly to this)

incremental change

introducing many small, gradual changes in order to meet a goal e.g. improving quality = refining each component of a product

radical change

stepped change e.g. plan for the sudden automation of a production process as would be extremely disruptive to work practices

disruptive change

shift in the underlying forces of an industry or segment of an industry e.g. retailing or cameras on phones influencing market for cameras

managing change

the moving of individuals, teams and organisations from a current state to a future desired state (involves helping employees to understand, commit to and accept the need for change)

lewin’s force field analysis (x4)

1. identify and evaluate (score) the driving forces for change

2. do the same for restraining forces

3. chart and calculate the overall ranking

4. develop a strategy to strengthen driving forces or weaken restraining ones

driving forces

those seeking to promote change

restraining forces

those attempting to maintain current business operations

equilibrium

the balance between the driving and restraining forces (must be upset for change to occur)

value of change (x5)

1. maintain a competitive advantage

2. can take advantage of developing technologies

3. customers needs and wants constantly changing so must be prepared to meet their needs

4. change can lead to improved working conditions and greater job satisfaction

5. improve organisational structure (efficiency + productivity)

flexible organisations

to respond to change, businesses must be flexible so they can respond quickly

benefits of flexible organisations (x6)

1. respond quickly to market conditions

2. cut down costs, particularly labour ones

3. improved 24/7 customer service

4. subcontract and outsource non-core features

5. cut down business premise costs

6. improved motivation and productivity

restructuring

fundamental internal change to the organisational structure or systems of a business e.g. Ford

examples of restructuring (x4)

1. dismiss employees

2. eliminate whole departments

3. close retail or factory locations

4. outsource their manufacturing

advantages of restructuring (x4)

• operational costs can be reduced

• outsourcing can be less expensive

• layers of management can be removed which can help communication and decision-making

• new technologies may enable a competitive advantage

disadvantages of restructuring (x4)

• can lose highly skilled workers

• remaining staff may have to be retrained (costly)

• insecurity and morale issues for remaining staff

• employee responsibilities may change (temporary fall in production)

delayering

the removal of one or more levels of hierarchy within an organisation (producing a flatter organisational structure with managers having a wider span of control) e.g. Microsoft

advantages of delayering (x5)

• can redesign jobs so greater delegation, empowerment and motivation

• more authority is given lower down organisation

• improved communication as messages pass through fewer layers

• departmental rivalry is reduced

• reduced costs and fewer managers who tend to be on higher salaries

disadvantages of delayering (x5)

• not all organisations suit flatter structures as workers on the factory floor may not want more authority

• motivation and security issues with remaining staff

• period of disruption as employees learn their new roles

• wider span of control can reduce communication

• loss of ‘corporate knowledge’

flexible working contracts

give employees a choice over the actual times they are contracted to be at work e.g. Google

part-time working

employees are contracted to work less than full time hours

term time working

workers remain on full time contracts but can take time off during the school holidays

job sharing

two or more people share the responsibility of a job between them

flexitime

allows employees to choose, within certain time limits, when to start and finish work (as long as present at core times)

career breaks or sabbaticals

extended periods of leave, normally unpaid, from a few months to a few years

zero-hour contracts

individuals have no guarantee of a minimum number of working hours (only when required)

advantages of flexible working (x5)

• employees have greater freedom

• can reduce commuting time allowing for improved work-life balance for employees

• can improve morale and reduce absences

• reduction in overtime costs, late arrivals etc.

• reduces unnecessary costs of paying employees when not needed

disadvantages of flexible working (x3)

• administration of the scheme has significant costs

• when premises are open longer there may be increased overheads

• employees may not work at certain times which may not be suitable for all organisations

organic structures

flat or open structures typified by wide spans of control, decentralisation, low specialisation and formalisation, horizontal communication and loose departmental control e.g. Patagonia or Facebook

mechanistic structures

more traditional and highly inflexible structures typified by narrow spans of control, centralisation, high specialisation and formalisation as well as rigid departmentalisation e.g. McDonald’s

what does the structure a business chooses depend on? (x5)

1. industry → organic structures work best in a fluid, unpredictable business climate i.e. start ups

2. size of organisation (larger = mechanistic as clear lines of authority makes it simpler)

3. technology (mechanistic if tasks are routine etc.)

4. management style

5. employee skills (organic requires versatility)

knowledge management

the process of capturing, developing, sharing and effectively using organisational knowledge

uses of knowledge management (x2)

• allows predictions, associations and predictive decisions as found in connections, conversations, experienced based intuition and ability to compare (personality)

• providing insight, guidance, experience and know-how for the purpose of decision making and effective action

information management

the provision of the right information to the right people at the right time (processed and factual data easily expressed in written form)

e.g. big data and data mining

benefits of knowledge and information management (x7)

1. sustainable competitive advantage as can exploit it

2. sharing of information between employees means knowledge doesn’t leave with employees

3. substantial savings as more easily brought ‘up to speed’ with valuable knowledge

4. lead to greater innovation

5. help a ‘global team’ of management coordinate and share knowledge and ideas (avoid managerial diseconomies)

6. decrease in labour turnover and increase in productivity

7. helps to ensure faster and more accurate decision making as utilises skills of all employees

barriers to change (x6)

1. lack of clear objectives or sense of mission and purpose

2. inappropriate and insufficient resources to assist change

3. inappropriately trained staff with non-relevant experience

4. resistance to change in relation to impact on employees

5. nature of organisaton

6. external factors such as competitors’ actions

Kotter + Schlesigner’s reasons for resistance to change (x4)

1. parochial self-interest = a desire not to lose something of value in terms of implications of change

2. misunderstanding and lack of trust

3. different assessments as employees don’t think it makes sense

4. low tolerance of change as fear not able to develop new skills

education and communication to overcome barriers to change

one to one discussions, presentations or group reports etc.

especially relevant if resistance based upon a lack of understanding and change requires resistors help

participation and involvement to overcome barriers to change

especially important if initiators for change don’t have all knowledge, skills and information so can use other employees (making them more committed and ‘buy in’ to change)

facilitation and support to overcome barriers to change

providing practical and emotional support to employees who have difficulty dealing with change including training in new skills or offering mentoring and counselling services

negotiation and agreement to overcome barriers to change

giving resistors incentives to either adapt or leave e.g. higher wages for no industrial action etc.

manipulation and cooperation to overcome barriers to change

co-opting an individual or a leader to become involved for their cooperation and influence on other employees (not fully informed)

explicit and implicit coercion to overcome barriers to change

suggest it may result in a loss of their jobs, being transferred or a loss of promotion prospects

organisational culture

the behaviour of people within an organisation and the meaning that they attach to those behaviours (based on values of founders, senior managers and core people who direct the organisation)

culture

organisation’s vision, values, norms, systems, symbols, language, assumptions, beliefs and habits

culture of Google (x5)

• teamwork and creativity central to the design (to boost productivity and satisfaction)

• staff treated as friends with access to various facilities e.g. gyms, hair salons etc.

• 20% of time spent on external projects

• on-sight solar panels to meet energy needs sustainably

• free food to meet all dietary preferences/needs

culture of Innocent (x4)

• family atmosphere and strong culture to motivate employees based on entrepreneurial traits

• lots of trust (viewed as a motivator)

• engaged workforce

• receive feedback constantly

how is culture demonstrated within a business (x6)

1. aims

2. behaviours of senior staff (+ in response to risk)

3. recruitment and training procedures

4. the way visitors and guests are looked after

5. degree of delegation

6. speed of decision

importance of organisational culture (x5)

1. creates distinctions between one organisation and another, differentiating

2. provides a sense of identity for employees and members

3. helps to generate commitment to something larger than self-interest

4. helps to hold organisations together by providing appropriate standards for what to do/say

5. guides and shapes the attitudes and behaviours of employees by defining rules etc.

task culture (+ examples)

project teams complete set tasks e.g. innovative businesses like Google

‘getting the task done’ so often when environment is rapidly changing and product life cycle is short

involves team working which ensures skills of individuals are exploited fully

role culture (+ examples)

clearly delegated authorities with a highly defined structure e.g. schools or the NHS

controlled by procedures and role descriptions (so coordination is from the top)

value predictability and consistency so difficult to adjust to change

power culture (+ examples)

control radiate from the centre with power concentrated with few individuals e.g. family business or Virgin (Richard Branson = charismatic leader)

decisions made quickly but success depends upon skills of those ‘at the top’

performance judged upon results so can be accompanied by low morale or high labour turnover

person culture (+ examples)

people (with similar training, background and expertise) believe themselves to be superior to the business e.g. firm of architects

exists when individuals dictate the firm’s policies and strategies to gain personal benefits

difficult to manage as strong sense of how they want to work (but bring own expertise)

reasons for changing organisational structure (x4)

• if there is a new leader who wants to do things differently

• if society’s values change e.g. ethical/environmental policies

• if performance of the business is deteriorating

• if there are new owners with different objectives (= culture clash w. mergers and takeovers)

problems of changing organisational culture (x3)

• change may be challenging and existing employees may resist

• beliefs may be deeply held so may instead cause questions on how they view their job

• may involve extensive training and education which may need heavy investment

strategic implementation

creating a framework for carrying out the strategy agreed at both corporate and functional levels by assigning responsibilities and operational targets (about 70% of strategic plans are never implemented)

method of strategic implementation (x4)

1. identify the mission and goals of the organisation

2. use a SWOT analysis before the strategies are put together to analyse internal and external environment

3. formulate strategies

4. implement strategies and evaluate results

external factors affecting strategy (x2)

1. changes in the external environment may affect strategic plans and their implementation e.g. economic cycle

2. changes in the firms competitive environment may affect implementation as competitor’s actions may change chance of success

internal factors affecting strategy (x8)

1. leadership styles need to be in support of strategy so actions align

2. organisational structure and culture

3. communication can overcome resistance

4. timing

5. adequate resources

6. network analysis for planning

7. monitoring to review progress and ensure accountability of meeting targets etc.

8. reviewing and evaluating for alternatives

value of leaders (x3)

• likely to be involved in setting, communicating and implementing the strategy

• if leaders do not invest time, it is unlikely to be successful

• need to help employees understand how the company could benefit from change

value of communication (x3)

• usually developed by senior leaders and managers so reason and benefits for change must be communicated to get employees ‘on board’

• essential to overcoming resistance

• must reach every level of the organisation

importance of organisatonal structure (x3)

• determined by culture, size of business, leadership and management, type of product and market

• structure must fully reflect the organisation’s mission, objective and strategy (e.g. increasing sales requires expansion)

• broken up into functional plans so a clear organisatonal structure with clear functional responsibility would assist strategy

value of network analysis (x2)

• involves planning the different elements, working out the order and identifying the key activities to ensure efficiency

• can understand where resources need to be allocated for different tasks to be completed in a set time

nodes

circles representing the beginning and end of an activity split into:

1. left hand side = number of node

2. top segment is earliest start time

3. lower segment is latest finish time

activities

events or tasks that consume time and are shown as lines or arrows that link the nodes (a letter or description is above)

duration

length of time that it takes to complete an activity and shown beneath the line representing the activity

EST

depends on the completion of the previous activity and always starts as 0 for activity 1

work forward from left to right by adding the duration of activities on the path leading to the node

if more than one path, highest total is taken

LFT

work backwards from right to left as the final node must equal the EST

deduct the duration of the activity when going backwards

if multiple, take the lowest possible value

method of creating a network (x5)

1. draw a node to represent the start of the network

2. identify any activities that don’t have any prerequisites (don’t rely on the completion of another activity) and draw lines from left to right

3. identify the activity line by placing a letter and the duration

4. move on to the first activity

5. carry on until complete

critical path

sequence of activities that cannot be delayed without delaying overall completion

those activities where the ESTs and LFTs are the same

non-critical activities can be delayed without delaying the completion time

total float

the amount of time that non-critical activities can be delayed without delaying the completion of the project as a whole

float calculation

LFT - EST - duration

benefits of network analysis (x8)

1. allows a business to improve efficiency of resources

2. helps the business know when activities are scheduled, assisting resource planning and stock ordering

3. can use CPA to divert resources from non-critical activities to critical ones

4. can help monitor and review project

5. forces managers to undertake planning

6. can identify impacts of delays

7. can be used alongside lean production

8. helps reduce risk and cost of complex projects

problems of network analysis (x7)

1. managers may be inflexible and rigidly stick to timing in CPA, missing opportunities to reduce overall time

2. any delay can have serious consequences if employed contractors etc. as can’t wait

3. complex activities may be difficult to represent accurately

4. based on time estimates that may not be accurate

5. doesn’t guarantee success

6. resources may not actually be as flexible as management hope

7. too many activities may make it too complicated