3.10 – Managing Strategic Change
Managing Change
Causes of change:
Internal: External:
Change in business size Change in technology
Change in workforce Change in market (consumer tastes)
Change in ownership Demographic changes
Change in legislation
Change in economy
Rapid change – Occurs in response to a shock to the business
Affects many markets
Unstructured
Under-resourced
E.g., 9/11
Disruptive change – When an industry undergoes radical change that affects how all firms
within it operate
Affects one market
E.g., Nokia’s downfall when smartphones because popular
Incremental change – Internal, structured and timetabled change
Affects only one business
E.g., Walkers’ crisps competition to find what flavour is most popular
Benefits of change:
Competitive advantage
Build reputation for adaptability
Take advantage of new technology
Meet consumer tastes more effectively
Lewin’s Force Field Analysis
,3.10 – Managing Strategic Change
Lewin’s force field – A model used to weigh up a potential change
Numerical values 1-5 are assigned to each pro (driving forces) and con (restraining
forces) of a change based on how important they are
The values for the driving forces are added
The value for the restraining forces are added
The side with the larger number determines whether the business should follow
through or not
E.g., Cadburys crème egg changed to using cheap chocolate instead of Cadbury’s dairy and
put 1 less egg in each packet. Resulted in a £10m loss after easter
Benefits: Drawbacks:
Weight up importance of each force Oversimplified
Assess whether to make change Subjective
Consider both sides of decision Reliant on very accurate data
Useful to consider strongest argu-
ments for and against
Flexible Organisations
Flexible organisation – An organisation that can adapt quickly to changes in the external
environmental while maintaining efficiency
, 3.10 – Managing Strategic Change
Kodak was inflexible when digital cameras became popular
Whitbread was flexible – they went from pubs to coffee as they anticipated decline
in demand
How can functional areas be flexible?
Operations – Short lead times, JIT, ideal capacity utilisation
o Zara changes stock every month
HR – Skilled workforce, part time and seasonal contracts
o McDonalds known for their good training program
Finance – Good cash flow, reserves of cash, ideally geared
o Microsoft has large cash reserves
Marketing – Market research
o Lego is very successful with market research
Methods of becoming flexible:
Restructuring – Aims to reduce current capacity
Flexible employment contracts – Allows a firm to be more responsive to changing
market conditions
o E.g., Zero hours, part-time, seasonal, working from home
Information and knowledge management (KMS) – More efficiently collecting and
sorting operational data that workers may need
o Saves time
o Gives competitive advantage
Delayering and Restructuring
Delayering – Removing a layer from the hierarchy.
Benefits: Drawbacks:
Managing Change
Causes of change:
Internal: External:
Change in business size Change in technology
Change in workforce Change in market (consumer tastes)
Change in ownership Demographic changes
Change in legislation
Change in economy
Rapid change – Occurs in response to a shock to the business
Affects many markets
Unstructured
Under-resourced
E.g., 9/11
Disruptive change – When an industry undergoes radical change that affects how all firms
within it operate
Affects one market
E.g., Nokia’s downfall when smartphones because popular
Incremental change – Internal, structured and timetabled change
Affects only one business
E.g., Walkers’ crisps competition to find what flavour is most popular
Benefits of change:
Competitive advantage
Build reputation for adaptability
Take advantage of new technology
Meet consumer tastes more effectively
Lewin’s Force Field Analysis
,3.10 – Managing Strategic Change
Lewin’s force field – A model used to weigh up a potential change
Numerical values 1-5 are assigned to each pro (driving forces) and con (restraining
forces) of a change based on how important they are
The values for the driving forces are added
The value for the restraining forces are added
The side with the larger number determines whether the business should follow
through or not
E.g., Cadburys crème egg changed to using cheap chocolate instead of Cadbury’s dairy and
put 1 less egg in each packet. Resulted in a £10m loss after easter
Benefits: Drawbacks:
Weight up importance of each force Oversimplified
Assess whether to make change Subjective
Consider both sides of decision Reliant on very accurate data
Useful to consider strongest argu-
ments for and against
Flexible Organisations
Flexible organisation – An organisation that can adapt quickly to changes in the external
environmental while maintaining efficiency
, 3.10 – Managing Strategic Change
Kodak was inflexible when digital cameras became popular
Whitbread was flexible – they went from pubs to coffee as they anticipated decline
in demand
How can functional areas be flexible?
Operations – Short lead times, JIT, ideal capacity utilisation
o Zara changes stock every month
HR – Skilled workforce, part time and seasonal contracts
o McDonalds known for their good training program
Finance – Good cash flow, reserves of cash, ideally geared
o Microsoft has large cash reserves
Marketing – Market research
o Lego is very successful with market research
Methods of becoming flexible:
Restructuring – Aims to reduce current capacity
Flexible employment contracts – Allows a firm to be more responsive to changing
market conditions
o E.g., Zero hours, part-time, seasonal, working from home
Information and knowledge management (KMS) – More efficiently collecting and
sorting operational data that workers may need
o Saves time
o Gives competitive advantage
Delayering and Restructuring
Delayering – Removing a layer from the hierarchy.
Benefits: Drawbacks:
