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The rapidly increasing pace of change threatens to overwhelm many businesses. The ability to manage, embrace and adapt to change will determine a company’s competitive advantage and survival. Successful managers anticipate and adapt to changing circumstances, rather than being caught unprepared. The forces driving change come from both internal and external factors. However, there are businesses that encourage change, while others resist it.
Changes within the external environment make it necessary for managers to make adjustments to business operations. The external business environment comprises the factors that are outside the control of owners/managers. An external factor includes the changing nature of markets. Any change within the market has an impact on the business’ external environment. So managers undergo globalization where hi-tech communication and low transport costs occur between all countries in the world. Another factor is the economic influences. All businesses experience the fluctuations in the levels of economy; peaks, recessions, recoveries and troughs. Legal and political influences also have an impact on the business. The process of deregulation and regulation in Australia such as customer protection, occupational health and safety, tax, ABN…etc have led to significant changes in the legal framework within which businesses must operate.Technology is another external influence which increases productivity within a business and improves the quality and range of products and services. It also allows information to be rapidly transmitted to a number of customers in a number of ways. The last external factor is considered to be social influences. Changing tastes, fashion and culture all impact on the business’ profit levels and growth. Failure to respond to these changes can threaten the business’ stability and viability.
Internal changes come from the desire to develop new and improved ways of doing things. The internal business environment comprises the factors that are within the direct control of owners/managers. The use of Electronic commerce (E-commerce) and the introduction of new systems and procedures of dealing with things is an internal factor that influences on the business. E-commerce covers all transactions made by electronic methods, such as phones, internet. It could be a business-to-consumer by selling products over the internet or a business-to-business where it reduces the costs of doing business and information is shared amongst employees/employers.
As the business environment changes, organizations examine and modify their business structures. Structural change refers to the changes in how the business is organized. There are many responses that occur as a result to change within the business’ organizational structure. Outsourcing is one of them. This refers to giving a part of the business’ activities to another business to perform because it is cheaper. This reduces costs and focuses on core activity. Establishing a flat management structured business centre is another response to change within its organizational structure. This gives the individuals’ a greater responsibility in the organization. It also creates a shorter chain of command with a wider span of control. The third response is the strategic alliances and networks. This is referred to when 2 or more firms join to pool resources in order to help growth and survival in the long-term goals.
Businesses are like individuals. They find some changes difficult to cope with. Effective management of change is the understanding of the reasons for resistance that often occurs in response to change. Financial costs is the major reason for resistance to change. The main financial costs include;
1. Purchasing new equipment: These costs will vary depending on the type and quantity of equipments purchased.
2. Redundancy payments: Employees are redundant when their skills are no longer required by the business.
3. Retraining of the workforce: As new technology is introduced, employees must be retrained, under a process called ”training and development”. The aim of this is to improve employee productivity.
4. Reorganizing plant layout: Plant layout in the physical management of people and machinery within a business. Major changes require extensive rearrangement of existing facilities.
Inertia of managers and owners is another reason for resistance to change. “Inertia” refers to the unwillingness and lack of energy, a manager has towards change. This occurs for many reasons; lack of skills/confidence. Another reason is cultural compatibility in mergers and takeovers. When two organizations merge or takeover, their business culture is never alike. Staffing is another reason for resisting change in an organization. Employees resist change for many reasons; deskilling, acquiring new skills or even loss of career.
Change is any alteration in the business and work environment, for example, change in consumer tastes, change in production methods, changes in markets or products sold or change in the way employees perform their tasks. It could also be a change to the way things are perceived or new ways of dealing with problems. However, it should be managed effectively; therefore many steps need to be undertaken. Identifying the need for change is the first step undertaken by managers. By understanding the changing factors within the business and identifying the financial data, managers can better identify current trends and predict future changes. Setting achievable goals is considered to be the second step in this process. This involves the mission statement that indicates the purpose of the business and states its keys and goals, that must be achieved. The third step is identifying the change models. A model is a simplified version of reality. Two very successful models by Kurt Lewin were developed in the late 1940s;
1. Force-Field Analysis: This refers to the driving forces (that encourage and support change) and the retraining forces (that resist change) which both push in opposite directions to reach equilibrium. Driving forces include culture, change agents or availability of training. Whereas, the restraining forces hold the change back and create resistance within the workplace.
2. Unfreeze/Change/Freeze: This process involves the preparation of employees for change (unfreeze) then the introduction of new procedures (change) then the reinforcement of change once it is implemented (freeze).
Social responsibility is the awareness of the business management of the social, environmental and human consequences of its action. Customers may react by ceasing to purchase products if they learn that the business is exploiting employees, polluting the environment or using inappropriate technology. Ecological sustainability is the use of methods of productions that conserve the environments resources for future generations, not polluting the air and water that are essential for our survival. Technology is also a social responsibility which a business owner will endeavor to contribute to the transfer of environmentally sound technology and management methods. Globalization has brought a change in the cultural diversity of workplaces. With globalization, businesses are finding new approaches to staffing. Moreover, E-commerce has also introduced change in many facets of the business organizations. It has affected employees across a wide range of jobs. However, it should be used appropriately.
In conclusion, many changes have been introduced to the business’ organizations. Whether it is encouraged or resisted by employees/ employers, it should be managed effectively or otherwise it may create a large impact on the business’ activity which will pull its productivity down.
