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Unit 10 -- managing strategic change - Coggle Diagram
Unit 10 -- managing strategic change
Managing change
Why do businesses change
To meet objectives
To respond to internal factors
To respond to external factors
Gain competitive advantage
Change management
Change management
-- this is the process where a business responds to the enviroment that it is in.
Types of change
Step change
This is a process of sudden, quick change that is used when change must occur rapidly.
The problem with step change is that it is harder to prepare everyone for and may face more resitance.
Incremental change
This is the process of a gradual change making the process more platable to the staff.
However, incremental change is slow and can't be used when change must occur rapidly.
Disruptive change
This is a type of step change where the change is forced to happen due to changes in the external enviroment (such as changes in tech).
This form of change impacts every business in a market.
Benefits of change
Helps sustain competive advantage.
Aligns business strategy with needs and wants.
Being seen as an innovative, changing business may help brand image.
Changes to organistational structure may help improve business communication.
Could enable businesses to use new technology.
Ways of managing change
Appointing a change leader.
Establishing a project group (experts within the business to run the change process).
Gaining commitment from staff.
Lewin's force field analysis
This is a model that provides an overview of the forces pushing for change and against change. If the forces are equal or if the opposing force is greater then no change occurs.
https://docs.google.com/drawings/d/1lzAk9v-yMjoIbQNUOGrDcv_438PbKWEP-grwwM4syG4/edit
Kotter and Schlesinger
Reasons for resitance to change
Self interest
If people are concered for their jobs then they are not going to want the change to occur.
Misinfomation
If there is misinfomation or a misunderstanding then poeple wont have the correct infomation to support the change and will therefore see it as unesscary.
Different appriasal of the situation
If people think the situation requires a different solution then they may appose the change as it is unecsary.
Opposition to change
If a business has a low tolerence for change or is stuck in intertia then people within the business may just think there is no need to change and it would be best if they did as they were.
6 ways to overcome change
Education and communication
If people have the correct infomation then this may make them less scared for their job, may help deal with misinfomation and help people understand the logic of the change.
This is the first policy to use, but is not a short term policy and must be maintianed throughout the change process.
Participiation and innlovement
Called onboarding this is the process of getting people 'on board' of change as effective particpiation should ensure commitment and not compleince.
However, how much involvement is allowed in the process must be decided.
Explict and implict coercian
This is the option of last resort can strain relations within a business.
Explict
-- this is where people are tole what will happen to them if they don't follow the change.
Implict
-- This is where the impacts of not following the change are implied.
Negoation and bargining
This is the process of giving people an incentive to follow the proposed change or an incentive to leave (voluntary reducancies).
Facilitation and support
Some people will need support to help cope with change (more so if fear is self-interested), this support could include providing training, mentoring and listening to concerns.
Manipulation and co-option
Co-option
-- this is the process of brining certian people on boared to support the change as they may resist change from the outside.
Manipulation
-- this is the process of selectivly using infomation to make people thing a certian way (very Machivallian and could be seen as unethical). If done with shareholders this could be illegal.
Flexible organistion
Flexible organistion
-- this is a business that is able to adapt and respond quickly to changes in its external enviroment in order to gain an advantage and sustain a competitive position.
Benefits
Business is more likely to be effiencent and productive as employees are more able to work when they want to (meaning they work when they are more productive).
More likely to respond to and meet changing customer demands.
Should improve decision making.
The business should be able to focus on core compenticies.
Makes the business more attractive to work at.
The business is more likely to identify and respond to changes in need.
Restructuring
-- this is the process inwhich a business changes its structure to make it more felxiable and agile.
Delayering
Benefits
Cheaper labour costs.
Easier communication (as messages pass through fewer layers).
Can make the business easier to control.
Drawbacks
Can be expensive in the short term as redunancies are paid.
The business may loose experienced employees.
Can damage moral within the business.
Delayering
-- this is the process where a business removes one or more levels of hierarchy from its organisational structure.
Flexiable employment contracts
Flexiable employment contracts
-- these are contracts that grant more freedom to employees of when they work, where they work (in the office or at home) and their pattern of work.
Benefits
Can help staff retention and recruitment as it creates a better working enviroment.
Enables the business to take advantage of new telecomunication technology.
Important to meet employee legislation.
In the UK all employees after 26 weeks at a business have the right to request flexiable working.
Can help obtain 24/7 customer service.
Drawbacks
Can increase red tape.
May lead to a loss in quality if key employees reduce the amount they work.
Can lower employee productivity.
Managers may find it hard to manage flexiable working.
Zero hour contracts
-- these are contracts where there are no gauranteed working hours, they also mean that an employee can say they can't work a certian week.
Structures
Organic structure
Informal
Flexiable and liquid.
This structure favours verable communication.
Is more decrentalised.
Change may be easier to manage in this structure, because this structure is more adapatable.
Mechanistic Structure
More formal and beaucratic.
Centralised decision making.
Formal lines of communication are used.
Stanardised policies and procedures across the board.
Little percived need for change.
Matrix structure
-- this is where an individual works across teams and projects as well as within their own department or function.
For example: a team tasked with desigining a new product might include engineers and design specialists (for the product) and people from the marketing and finance teams.
Each team member has two managers.
Function manager
Team manager
Pros and cons
Pros
Helps break down communication barriers (prevents silo effect).
People can use their skills for a variety of purposes, provides them with skill variaty (Hackman and Oldman).
Likely to improve motivation between team members.
Encrouges the sharing of good practises between functions.
A good way of sharing resurces across a department.
Cons
Hard to organise.
Members of teams may have devided loyalties between project and function manager.
There may be a lack of accountability.
Team members may neglect functional responsibilities.
Takes time for employees to get used to the new structure.
People will be less productive durring this time.
Organistional and business culture
Organistional culture
-- these are the values and stanards shared by the people within an organistion, the culture of a business impacts how it operates.
Ways in which culture infleunces businesses
Infleunces decision making (top down/buttom up).
Leaderhip style (autocratic or democratic).
How the workforce works (what are there attitudes to work).
Infleunces on the culture of an organistion
Views of the founder (espically early on, but this can be felt for a long time).
Size of the business (culture should change as businesses grow).
Leadership style (laissez faire vs autocratic).
Reward structure (are they team or personal rewards).
Industry (tech v building).
Changing culture
Why change business culture
Improve business performance.
The culture of a business may be holding it back as it could deprive the business of innovation or the best staff.
Respond to external changes
Changes in the external enviroment may change how people want to work (Covid and the rise of Telecommunication).
Signs culture needs to change
Internal fighting
High labour turnover and absenteeism.
Excessive beuacracy.
Reducing customer service.
Poor communication.
Models for business culture:
Handy's model
Handy's model showed the 4 different types of culture within a business and how different businesses fitted different cultures.
Cultures
Power culture
This is where the business is highly centralised with a few people at the centre of the business.
Common in small businesses where the owner/founder is still in charge of the business and wishes to retain close control over the business.
Pro
Decision making is quick and stanardised.
Con
Can be hard to manage when the business grows.
Role culture
In this culture employees have a clearly defiened role within the business and they know who they report to.
This is the common structure for businesses that have 'out grown' a power structure.
Task culture
In this culture employess identify with the project they are working on within the business, an employees importance is connected to their senority and skills on a project.
Common among businesses where multiple projects are on gowing at once.
Person culture
In this business culture employees are given their own space and area of the business to control, this system ensures that individuals are able to make use of their personal skills, but reduces business uniformity.
Connected to laisez-faire management as managers must trust their employees to do their work.
Common in medicin, law and universities.
Hofstede national cultures
This model is less focused on the culture within a business as the culture of different countries and how this will impact a business' culture.
National cultures
Individulism v collectivism
Some societies prefer the performance of the individual whilist overs view the performance of the team as paramount.
Infleunces how people are rewarded
Are rewards given out based on personal success (indivdualism) or team success (collectivism).
Power distence
Power distence
-- this is the extent to which inequality is tolerated by society and whether there is a strong sense of position and status.
High PD score = tall business structure, respect authority, beaucracy and rank.
Low PD score = flat business structure, a great emphasis on personal responsibility and auotnomy.
Masculinity v femininity
Masculine decision making
-- hard edged, fact based and agressive style of decision.
Femine decision making
-- a greater degree of consulation and inuitative analysis.
High score = masculinity
Uncertinity avoidance
This measures how willing people are to take risks and how anxouis people fell when in unkown situtions.
Low levels of uncertinity avoidence mean people are willing to take risks and embrace change.
Long term orintation
This regards how important time horizons are for different cultures.
Some countries place a high level of importance on long term performance.
Some countries place a high level of importance on short term performance.
Indulgence v restraint
Indulgence
-- this is a society that has a reletivly free gratification of basic and natural human drives for having fun and enjoying life.
Restraint
-- this is a society that supresses gratifiction of needs and regulates it by strict social norms.
High score = indulgence
This model is used by businesses to help them decide how to manage different sections of a business in different countries.
Managing strategic implemention
How to implement strategy effectivly
Clear allocations of resources.
Clear allocation of responsibilites.
Set clear stanards.
Manage and cordinate resources.
Predetermine sucess critetia.
Adapt as necessary.
Strategic implentation
Value of leadership in strategic implenation
Leaders need to be effective throughout the entire process and leaders will be responsible for:
Setting and sharing clear policies.
Comunicate strategy to people.
Overcoming resistence to change.
Monitoring progress.
Taking corrective action.
Provide clear strategic direction.
Value of effective communication in strategic implentation
Essential communication is important for the effective enactment of strategic implementation:
Enables infomation to be shared between all stakeholders.
Can help overcome resistence to change (misinfomation).
Can help gain support from investors for the business.
Helps keep trade unions onside (helps overcome self-interest).
Helps everyone understand their role.
Helps cordinate all the key parties.
Importance of organistational structure in strategic implementation
Organistional structure infleunces the ability of a business to effectivly implement a new strategy.
Organistional structure infleunces strategic implementation through:
Span of control
Infleunces the ease in which managers can communicate.
Chain of command
The time it takes to communicate stratgey and tasks down the chain of command.
Central or decentralised structure
Allows allocation of roles during implmention.
Power distence
Organistational structure
Functional structure
In a functional stucture each functional department of the business operates as its own cell.
Cons
Can lead to people identifying more with their functional department and this can lead to the silo effect.
Silo effect
-- this is where people identify more with their functional department and strice for that department to do the best they can whether or not it clashes with the success of other departments.
Pros
Helps each section of the business specialise and helps improve communication between people within the department.
Product structure
This is used whena business has multiple product lines with different consumers.
A product structure means that each individual product has its on team with its own marketing, finanance, operations etc.
For effiency there can be some shared functions such as HR.
Forms of organistational structure
Functional structure
This is a structure where a business splits each of its functional areas form their own part of the business.
Cons
This can lead to employees indentifying more with their functional department and this means they become more concered with the success of their functional department instead of the success of the business.
Silo effect
-- this occurs when people view the business from their own departmental perspective and regard themesevles as somewhat seperate from the other parts of the business.
They only think about what is best for their department.
Product structure
This is where a business has multiple product lines and the business's functions are split up into those product lines which means that product A and product B have seperate marketing and operations departments.
Common in industries like banking where different product lines require very different management.
E.g. the needs of a millonair and their banking are very different to a student and their banking.
Enables staff to specialist on their product line,
therefore
improving quaility.
Cons
Can create a situation where parts of the business are competing with each other, damaging the sense of business unity, reducing communication and possibly leading to canablistion.
Can be expensive as some departments may be unessecarly duplicated, after all deos each product need its won HR or IT teams.
Regional structure
This is where departments/functional areas are grouped on geopgraphical location meaning their could be a Europe Division and a North America Division.
Used for global brands that compete in different countries that may have different consumer tastes.
It is common in the car industry where a car company will sell different types of cars to consumers in the UK and Australia.
Matrix structure
In this system individual job holders have more then one manager, this could mean that in their team they report to their regional manager and a product manager.
Pros
Prevents the silo effect as everyone works together.
Enables the sharing of infomation throughout the business as divisions work together.
Cons
Can create managerial confusion as employees will not know which one of their managers is the one that they are under the control of the most (i.e. when managers disagree who do you listen to?).
Critical path analysis
Critical path analysis
-- this is a method of planning that shows what jobs within a project as critical enabling the business to ensure they complete a project in the shortest period of time.
Why is it important
Helps the business operate as effienctly as possible, meaning that money and time won't be wasted on expensive business expenditures.
Antonomy of a CPA
The left most section is the number of the node.
Top right number is the earlists start time.
Bottom right is the latest finish time (the latest an activity can be finished without haiving a knock on effect with the rest of the project).
If the EST and LFT are the same then a node is on the CPA.
Float time is the spare time an activity has to be finished in before it becomes critical.
What is needed to calculate CPA
All the activites in a project.
Time it takes to finish each task.
The dependincies (prior tasks that need to be completed).
Uses of the critical path analysis
Estimate and minimise project time.
Helps plan and organise resources.
Plan and organise resources.
Helps the business piroritise the task.
Helps provide direction to the team.
Pros and cons
Pros
Helps reduce the risk assocaited with a project as a business knows what needs to be completed and when.
Encrouges careful assement of the resources and time used in a project.
Helps the business plan the process in which they are going to complete the project and enables them to divert resources away from float time areas to the critical path.
Provides managers a useful overview of complex projects.
Cons
Reliability is absed on acuarte assements (poor assements, poor acuaracy, limited use).
Deos not guarntee success.
Resources may not be as flexiable as management would like.
Diagrams can become complacted and hard to use.
Problems with strategries and why they fail
Why do strategic decisions go wrong:
Wrong objectives are set.
Changes to the external enviroment (PESTLE).
Competitor actions.
Poor leadership.
Resistance to change.
Poor implementation.
Poor data analysis.
Planned and emergant strategries
Planned strategries
Planned strategries
-- this is the strategy that the business has adopted created through a formal planning process, based on corprate obejectives.
Provides a clear direction, but limits flexability.
Emmergant strategries
Emmergant strategries
-- this is a strategy that is not planned and develops within a business over time in the absence of a mission.
Enables flexability within the business as they are able to shift with the times (e.g adopting new tech), but may lead to frequent strategry changes and internal confusion of the direction of the business.
Strategic drift
Strategic drift
-- this occurs when the strategy of a business is no longer relavant to the external enviroment the business is facing.
Stages
Incremental change
-- small changes are made to the strategy to ensure the business remains on track with the external enviroment.
Strategic drift
-- the business is still where it needs to be, but it is begining to loose connection with business objectives.
Flux
-- management struggles to make decisions as they try and get the business back on track, what was planed is no longer anywhere near what the business intended.
Tranformational change or death
-- the business must make substianl changes to the strategy to bring it in line with the external enviroment and objectives or they must change objectives.
Why deos it occur
Business fails to adapt to changing external enviroment.
What worked before deosn't work now.
Complancy has set in because of previous success.
Managerment deny their is a problem (inertia (Schlinger and Kotter)).
Corportate governance
Corporate governance
-- this is how the business is directed and controled (by the board of directors).
Board of directors
-- this is the group of people that is legally responsbile for the governance of the business (appointed by shareholders).
Job of the directors:
Set obejectives.
Determine strategy.
Provide leadership.
Supervise management.
Report to shareholders.
Best practise for corprate governance
CEO and chairman of public companies should be seperate.
A board should have three non-executive directors, two of whom should have no personal or financial ties (shares) to the business.
Each board should have an audit committee that is composed of non-executive directors.
Divorce of ownership and control
-- this is when the owners of the business do not run the day to day operations of a business.
Handling problems caused by divorce of ownership and control:
Ensure financial rewards to the managers are based off achieving objectives in line with shareholder interests.
Implement suitable corporate governance to ensure that shareholders are protected as far as possible.
Company legislation ensures that directors are accountable for their actions to shareholders.
Activist shareholder
-- these are shareholders that put pressure on exisiting managment or forces changes through the managment board. This is done by them using their votes given to them by ownership.
Evaluate strategic performance
Objectives must be measurable with both qualitative and quantative measurements.
Strategic evaluation includes:
Regular performance measurements agreed against pre-set targets.
Ongoing montioring of external and internal issues that might affect strategic plans.
Taking corrective actions to ensure that strategries are still approiate for current conditions and that the business is on track to meet its objectives.
Strategic planning
Benefits
Provides clear sense of directions.
It is a logical process.
Gives a range of possibilities.
Encrouges progress to be tracked.
Allows for progress to be reviewed.
Negertives
Excessive planning may reduce business flexability.
Needs to be monitored and reviewed.
Requires resources.
Strategic planning can't predict changes in the external market and these can make it useless.
Can't prevent the unexpected.
Contingancy planning
Risk managment
-- this is the process of identifying and dealing with risks threatning a business.
Contingancy planning
-- this is planning for unforseen events.
Process of contingancy planning:
1 --
Identify what and how things can go wrong.
2 --
Understand the impacts if things go wrong.
3 --
Devise plans to cope with threat.
4 --
Put in place strategries to deal with risk before they happen.
Crisis management
-- this is how a business handles potentially dangerous events.
Risk
-- this is the possibility of loss or business damage that can prevent or hinder the ability of a business to achieve its objectives.
Ways of dealing with risk:
Ignore it/wait and see.
Reduce the proability of risk (e.g. maintian good relations with staff to reduce chances of industrial action).
Share or deflect risk (e.g. insurance).
Make contingancy plans.
Treat risk as an opporunity (e.g. new tech can kill a business or it can help them expand).
Stages of business imapct analysis:
1.
Work out what can go wrong.
2.
Predict how likely it is to happen.
3.
Predict what the impact on the business will be.
4.
Work out long it will take for normalcy be restored.
5.
Identify mission critical functions to protect.
Pros and cons
Pros
Provides a sense of security.
Limits damage.
Speeds up recovery process.
Informs staff training.
Can be part of CSR (reducing the chances of job losses is ethical).
Cons
Can't predict the future and events that were not planned for may occur.
Costly and time consuming.
Needs reviewing to make sure it is not out of date.