Change, risk and uncertainty (A Level) flashcards

Topic 16: Change, risk and uncertainty

Internal and external reasons for change

Internal: a new leader or owner, new objectives or strategy, poor performance, growth beyond current systems, adopting new methods. External: new technology, competitors’ actions, economic change, new laws, shifts in customer tastes.

Kotter and Schlesinger: the four reasons for resistance to change

Self-interest, misunderstanding and lack of trust, inertia, and different assessments of the situation.

Kotter and Schlesinger: the six ways to overcome resistance

Education, participation, facilitation, negotiation, manipulation and coercion, running roughly from slow and consensual to fast and forceful. Match the method to the reason for resistance (misunderstanding → education).

Negotiation and coercion: when used, and the drawback

Negotiation (incentives such as early-retirement terms): when a powerful group clearly loses; costly and sets a precedent. Coercion: when speed matters and managers hold power; causes resentment, demotivation and staff leaving.

Force field analysis: driving forces score 2 and 5; restraining forces 3, 3 and 2. What does this suggest?

Driving = 7; restraining = 8. Restraining forces lead by 1, so the change is unlikely to succeed until managers weaken the strongest restraining forces or strengthen the drivers. The scores are subjective.

Types of business risk in the specification

Financial (borrowing, liquidity), strategic (new markets or products), operational (breakdowns, supply disruption), compliance (breaking laws), reputational (negative publicity) and cybersecurity (hacking, data theft).

Methods of managing risk

Market research, contingency and crisis plans, insurance, diversifying products, markets and suppliers, training, forecasting and cybersecurity measures. Pick one that reduces likelihood or impact and weigh its cost against the damage avoided.

Risk vs uncertainty, and the tools that suit each

Risk can be identified and roughly estimated: market research and forecasting suit it. Uncertainty cannot be predicted or measured: scenario planning and agility suit it.

Contingency plan vs crisis management

Contingency plan: a prepared response to a specific possible event, written in advance. Crisis management: how the business responds while an unexpected, damaging event is unfolding.

Scenario planning

Describing several plausible futures and planning a response to each. It prepares the business, but is time-consuming and reality may match no scenario.

The four ways to develop an agile business (9725)

A flat organisational structure (faster decisions), empowerment (decisions made close to the problem), transformational leadership (a vision that makes staff welcome change) and cross-functional teams.