The causes of change in business:
1. Changes in organisational size.
Most businesses will have a corporate objective of growth.
Can you remember the difference between organic growth and external growth?
Positive effects of growth:
- Economies of scale.
- Brand recognition.
- Financial security.
Hopefully as a business grows it will become more productive (automated production for example).
2. Poor business performance
Change in this situation may occur rapidly.
A new CEO may be appointed. See blog entries on McDonald's below.
Effects of poor business performance and the need for change:
A loss of competitiveness.
Poor productivity.
Possible cash flow problems.
Stakeholder worries.
Click on the picture:
3. Change in the market and other external factors.
Pestel analysis:
Political, Economic, Social, Technological, Environmental and Legal analysis.
A management technique that examines the effect that events or influences from outside may have on the performance of a company or organisation.
Political factors:
Economic factors:
Social factors:
Technological factors:
See: https://youtu.be/7_GpgSpaKTg
Legal factors:
Environmental factors:
Howard Schultz:
Click on the logo for a SWOT analysis:
Pestel factors will impact on:
Competitiveness.
Much will depend on how quickly a business responds.
Productivity.
Financial performance.
Stakeholders.
4. Changes in ownership.
This may be through a 'flotation' on the London Stock Exchange or smaller AIM exchange.
Or through a merger or takeover.
Effects of changes in ownership:
Competitiveness should increase but 'synergies' may take time to deliver.
Productivity should rise after initial disruption.
Financial performance should improve. However, failed mergers can be very costly.
Impact on stakeholders: may be positive or negative.
5. Change and effects of transformational leadership.
Style of leadership in which the leader identifies the needed change, creates a vision to guide the change through inspiration, and executes the change with the commitment of the members of the group.
Transformational leadership in sport:
Click on the picture:
A new leader may have a new vision or a new strategic direction.
Why were the following considered transformational leaders?
Steve Jobs (Apple)
Howard Schulz (Starbucks)
Anita Roddick (Body Shop)
