What Causes Change in a Business? Read the scenario given to you and say what was the cause of change in that case. [10mins]

TOPIC: Topic 1: Business Organization and Environment LESSON TITLE: Change Management COMPETENCY FOCUS: Entrepreneurship (S4): To develop your entrepreneurial skills in preparing a realistic proposal for a new business start-up. You will understand the process a business will have to go through when starting up, including the underlying principles of starting a business.   [IB Learner Profile Development: Reflective] Learning Objectives By the end of the lesson, you should be able to… LO1) To identify the causes of business change  LO2) To explain using examples the factors causing resistance to change LO3) To evaluate different strategies for reducing the impact of change and resistance to change. SMSC: You will assess the organisational culture of businesses in terms of fundamental structure, purpose and strategy development. CRITICAL THINKING KEY: Knowledge Application Analysis Evaluation

What Causes Change in a Business? Developments in technology Market Changes Consumer Tastes Legislation Changes in the Workforce Changes in the economy

BENEFITS FOR BUSINESSES TO KEEP ON TOP OF CHANGE Business survival Quicker response to SLEEPT factors/changes Competitive advantage (beat your competitors!) Increased chance of success and making a decent profit Better able to change as need arises

Type of Change Step Change – A significant change/large-scale change that has a significant effect on the business. Incremental Change- Smaller scale change, changes occur in smaller steps/stages. Directive change – One person gives instructions to another person. Organic Change – Changes that occur naturally within a business. Laissez-faire (leave alone) approach which promotes the workers to drive forward changes in the business.

The Effects of Change Shorter Product Life Cycles More emphasis on market research More emphasis on R&D Retraining of managers and ‘shop floor’ workers Businesses must take changes in to account in human resource planning A business must develop a culture that is responsive to change Businesses must be aware of competitors’ actions Changes in equipment needs Changes in production methods

How can a business foresee need for change? - SLEPT analysis

Case Study Read case study and respond to questions on pg. 522 (Raffo textbook)

Resistance to Change Businesses are likely to face some resistance to change from parts of the workforce: Workers/managers fear the unknown Employees/managers fear they wont be able to carry out new tasks Some workers worry that they may be moved away from ‘friends’ or to do a job they dislike

Removing the Resistance to Change Provide clear objectives Hold discussions with staff prior to change taking place Prevention of misinformation/rumours There must be sufficient resources allocated to achieving the change Follow company procedures and law Project Champions Project Groups

Lewin’s Force-Field Analysis

Lewin’s Force-Field Analysis Many factors drive change in a business.  Lewin identified four forces: In Lewin’s model there are forces driving change and forces restraining it. Where there is equilibrium between the two sets of forces there will be no change. In order for change to occur the driving force must exceed the restraining force

Lewin’s Force-Field Analysis Lewin’s analysis can be used to: Investigate the balance of power involved in an issue Identify the key stakeholders on the issue Identify opponents and allies Identify how to influence the target groups

Lewin’s Force-Field Analysis Forces for change include: Internal forces for change External forces for change A general sense that the business could “do better” Desire to increase profitability Reorganisation to increase efficiency Natural ageing and decline in a business (e.g. machinery, products) Conflict between departments The need for greater flexibility in organisational structures Concerns about ineffective communication, de-motivation or poor business relationships Increased demands for higher quality and levels of customer service Uncertain economic conditions Greater competition Higher cost of inputs Legislation & taxes Political interests Ethics & social values Technological  change Globalisation Scarcity of natural resources Changing nature and composition of the workforce

Exam Practice Revision Questions pg. 87

Reflection TOK Question, P.g. 87