5.3.1
Change
Causes of Change in a Business
Causes of Change in a Business
Business change occurs when any process, system or structure within the business is changing.


Organisational size
Organisational size
- An organisation changing size is an example of business change.
- A business may have to shrink and make people redundant if revenues are lower than expected.
- If a business is growing, then the organisation may need to hire more people and change its recruitment processes.


Poor business performance
Poor business performance
- Poor business performance can result in business change as leaders are likely to introduce measures to reduce cost which may include restructuring and redundancy.


New ownership
New ownership
- New ownership can result in business change if leaders have a different vision to previous owners.
- For example, Palmer Luckey, who founded Oculus VR was fired shortly after joining Facebook (after it bought Oculus).


Transformational leadership
Transformational leadership
- Transformational leadership can result in business change as employees are given opportunities to suggest changes and these may be implemented by managers and leaders.


The external environment
The external environment
- The external environment (PESTLE) may result in business changes as businesses must respond to internal and external changes to maintain competitiveness.
- For example, technological advances are part of the external environment and many supermarkets have introduced self-checkouts to take advantage of this technology.
- In many cases, the introduction of technology has resulted in reducing staffing and making redundancies.
Impact of Change
Impact of Change
Business change can impact several aspects of a business:


Competitiveness
Competitiveness
- Business change can impact a business' competitiveness.
- Any change which results in lowering unit costs can allow the business to reduce its selling price.


Productivity
Productivity
- Business change can impact productivity if the change involves replacing human labour with technology.
- Car manufacturers replaced lots of workers on their assembly line with robots made by businesses like KUKA.


Financial performance
Financial performance
- Business change can impact financial performance as change which results in lowering costs can improve profitability.


Stakeholders
Stakeholders
- Business change can impact stakeholders as employees may become concerned about their job security although shareholders may see increased dividends if profitability increases.
1Exploring Business
1.1Features of Business Organisations
1.2Organisation of Businesses
1.3Business Environment
1.3.1External Influences
1.3.2Political & Legal Change
1.3.3Economic Environment
1.3.4Social & Technological Environment
1.3.5Lifestyle & Technological Environment
1.3.6Corporate Social Responsibility
1.3.7The Competitive Environment
1.3.8Innovation
1.3.9Risk & Uncertainty
1.3.10Porter's Five Forces
1.3.11SWOT Analysis
2Marketing Campaigns
2.1Marketing
3Business Finance
3.1Sources of Finance
3.2Financial Planning
3.3Financial Statements
4International Business
4.1Globalisation
4.2International Business
4.3International Economic Environment
4.4Factors Affecting International Business
5Principles of Management
5.1Management & Leadership
5.2Theories of Motivation
6Business Decision Making
6.1Business Principles & Practices
6.2Quality Management
6.3Human Resources
6.4Documents & Business Decisions
Jump to other topics
1Exploring Business
1.1Features of Business Organisations
1.2Organisation of Businesses
1.3Business Environment
1.3.1External Influences
1.3.2Political & Legal Change
1.3.3Economic Environment
1.3.4Social & Technological Environment
1.3.5Lifestyle & Technological Environment
1.3.6Corporate Social Responsibility
1.3.7The Competitive Environment
1.3.8Innovation
1.3.9Risk & Uncertainty
1.3.10Porter's Five Forces
1.3.11SWOT Analysis
2Marketing Campaigns
2.1Marketing
3Business Finance
3.1Sources of Finance
3.2Financial Planning
3.3Financial Statements
4International Business
4.1Globalisation
4.2International Business
4.3International Economic Environment
4.4Factors Affecting International Business
5Principles of Management
5.1Management & Leadership
5.2Theories of Motivation
6Business Decision Making
6.1Business Principles & Practices
6.2Quality Management
6.3Human Resources
6.4Documents & Business Decisions
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