The causes and effects of change
| Change | How might it manifest itself? | Possible issues for managers to address | Possible benefits it brings managers | Effects on competitiveness, productivity, financial performance, and stakeholders |
|---|
Changes in organisational size
How might it manifest itself?
- expansion in size
- new bigger offices
- more staff
- overseas expansion
Possible issues for managers to address:
- diseconomies of scale: communication, control
- motivation
- performance management
- training
- labour costs
- changing culture
Possible benefits it brings managers:
- economies of scale
- brand recognition
- profits
- bonuses
- promotion prospects
- spread risks
Effects on competitiveness, productivity, financial performance, and stakeholders:
- better management leads to increased productivity
- productivity is lowered in the short-term whilst the changes occur
Poor business performance
How might it manifest itself?
- poor sales
- lower profits than expected
- increased costs
- slower expansion plans
- closure of offices
Possible issues for managers to address:
- morale
- resistance to change
- changing strategy/objectives
- how to improve performance
Possible benefits it brings managers:
- opportunity to change direction
Effects on competitiveness, productivity, financial performance, and stakeholders:
- productivity lowered
- competition can gain lead - benefits customers
- opportunity for them to do something about it
- innovation
New ownership
How might it manifest itself?
- merger
- takeover
- development from ltd to plc
- management buy out
Possible issues for managers to address:
- role duplication
- culture clash
- diseconomies of scale
- motivation
Possible benefits it brings managers:
- new ideas
- synergy
- new markets
- secure finances
Effects on competitiveness, productivity, financial performance, and stakeholders:
- increase in competitiveness
- improvement in productivity and innovation if the change in leadership is successful
- more motivation for employees to please the new owner
Transformational leadership
How might it manifest itself?
- change in CEO
- change in company ethos
Possible issues for managers to address:
- resistance to change
- complacency
Possible benefits it brings managers:
- opportunity for change
Effects on competitiveness, productivity, financial performance, and stakeholders:
- culture, motivation, new opportunities
The market and PESTLE factors
How might it manifest itself?
- new entrant
- competition leaving
- political change
Possible issues for managers to address:
- change objectives
- new strategy/brand profile
- new technology
- more research and development
Possible benefits it brings managers:
- new product launch
- new technology
- new ideas
Effects on competitiveness, productivity, financial performance, and stakeholders:
- if economic recession, customers spend less, may turn to substitutes
- market changes, environmental/legislation, more costly to fit consumer preference
2023 EDEXCEL - CAR INDUSTRY
- poor business performance:
- not taking on board the move to the EU
- changing work habits - home working
- move to buying second hand - economic crisis, shortage of microchips so cant produce new cars
- market and PESTLE factors:
- change manifesting in the car industry
- BREXIT - import and export markets changing
- environmental - EU link to legislation
- needs to follow social trends (move to electric)
Tesla’s goal was not to profit but to shift the car industry to electricity
dependent on innovation capital
- Elon Musk leverages his past success at PayPal and Space X to win support for future projects (to get stakeholders on board)
- Innovation capital consists of four factors:
- Who you are — your capacity for forward-thinking, creative problem-solving, and persuasion
- Who you know — your social connections with people who have valuable resources for innovation
- What you’ve done — your track record and reputation for innovation
- The things you do to generate attention and credibility for yourself and your ideas (impression amplifiers). Politicians with political capital can get others to join them in pursuing their objectives; in a similar fashion, business leaders with innovation capital can attract the resources needed for innovation to flourish