Chapter 1: Change

• What is change in a business?

  Change is an ongoing process that businesses can't avoid. However, it is done to increase competitiveness and to improve production operations and working environment.
• Causes of change in the business

  • Development in technology
  • Market change (new competition, globalisation)
  • Consumer tastes (more environmentally friendly products)
  • Legislation (taxation on pollution, government)
  • Change in the workforce (age and makeup of the workforce)
  • Changes in the economy (inflation< the trade cycle)
• Internal causes of change in the business

  • Changes in management style
  • Business ownership (takeover, new ethos)
  • Change in business size (bigger product range, new technologies, distribution channels)
  • Introduction of new technology
• External causes of change in the business

  • Introduction of new technology
  • labour market
  • Changes in the economic factor
  • Competition
  • Change in consumer tastes
  • New legislation
• What is rapid change?

  Rapid change is when the business alters its operation in a short period of time
• What is an incremental change?

  Incremental change is when the business alters its operation year after year. It allows the business to slowly adapt to the new changes.
• What is a planned change?

  A change that is planned and controlled by the business> This is done to reduce risks and profit from any benefits.
• What is an unplanned change?

  An unplanned change occurs randomly without any intentions on the part of managers or employees of addressing a problem.
• What is a strategic drift?


  Occurs when a business fails to adapt to changing market conditions
• Effects of change on a business

  • Change in production (require new production technique)
  • Shorter product life cycles (change of consumer tastes)
  • Diminishes brand loyalty (increased marketing costs)
  • New products needs to be developed (to meet customer needs)
  • Retain the workforce (needs new skills)
  • Look for new market
  • Meet new legal equipment
• What is negotiated total package? 


  When management and workers negotiate on how a major change in the way the business functions will be implemented.

  • Its is a planned change and is agreed between both management and workers
  • It is the effective method

  However,

  • It requires lots of preparation and expenditure
  • Can't be done in a competitive and difficult business environment
• What is a negotiated piecemeal initiatives?

  When management and workers will consult and agree on various changes as they become necessary (new shift patterns, productivity agreement).

  • It is easier to implement than total package of change

  However,

  Can be difficult because of the lack of a complete system change
• What is an imposed piecemeal initiatives?

  When managers plan and implement changes such as a move of flextime or development of quality circles in order to solve particular problems.

  • Saves time and the structure of change is with management

  However,

  • Imposition of change can be met with resistance from workers
• What is imposed total package?

  Introduce a major change all at once without consultation with workers.

  • It is used as a last resort
  • Changes are likely to be resisted by middle management and workers
• Importance of managing change effectively

  • To maintain competitiveness
  • Increase productivity
  • Improve financial performance
  • Manage stakeholders
  • Reduce the time needed to implement change
  • manage and control the costs incurred with change
• How to evaluate management of change?

  • delivery times
  • production defects
  • customer satisfaction survey
  • market share
  • sales turnover
  • profitability
• Employee preparation


  Consultation and communication with employees is essential as it prepares them for change. They may need to carry out new tasks effectively
• Increased research and development (R & D) 

  Increased expenditure on research and development is used both in preparation for change, and as a reaction to change.
• Additional capital investment


   If a business does not have access to sufficient finance, it is very unlikely that it will be able to implement effective change.
• Reasons why change is resisted

  • Self interest - caused from threat to job security or suppliers fearing for future orders
  • Misinformation and misunderstanding - stakeholders may not understand why change is needed as well as the strategy of the business
  • Low tolerance and inertia - many people suffer from reluctance to change. many seek for security, predictability and stability in their work
  • Different assessment of the situation _ there can be disagreements about what change is needed
• Manager resistance 


  Could result to a lack of experience or expertise. A fear of new markets and conditions could also lead to a lack of leadership skills to manage the change effectively.
• Worker resistance 


  Worker may want to preserve the existing routines to avoid threat to security and status. The threat of a change in a job role may result in demotion and threat to main group membership.
• Supplier resistance 


  The fear of increased cost, distruption to their established processes, or uncertainty about the benefits of the new direction the business proposes
• Shareholder/ owner resistance 


  The fear of operating in a new market and that it will be costly and damaging to dividends
• Lack of finance 


  The business may not have the capital to fund the changes that are needed (E.g research and development, product development, capital equipment).
• Lewin's three step process of change

  • Unfreezing - Creates a motivation for change and that employees have to show that change is necessary
  • Change or transition - Most difficult stage as they need to about the changes and allow employees to develop their own solutions. Support is also given in the form of training, education,etc.
  • Refreezing - Establishes stability once changes are made. Employees must not be forced into continual change but allowed time to adapt