OxfordAQA A-Level Business: Change, risk and uncertainty (9725)

This study guide follows the OxfordAQA International AS and A-level Business (9725) specification, Version 1.1, for International AS exams May/June 2027 onwards and International A-level exams May/June 2028 onwards. It teaches section 3.4.6 Change, risk and uncertainty, the last part of 3.4 Business strategy, which is International A-level only content. Anyone still completing the older 9625 specification should keep to that specification instead. Every business named here is invented.

Short version: revision notes · Test yourself: practice set · All Business (9725) topics: course hub · Tick it off: printable checklist · Find weak spots: free diagnostics

What 3.4.6 asks of you

Content heading	You need to be able to	Stage
Change	Explain internal and external reasons for change; weigh its advantages and disadvantages for stakeholders; explain barriers, including Kotter and Schlesinger’s four reasons for employee resistance; manage change using Lewin’s force field analysis and Kotter and Schlesinger’s six ways of overcoming resistance	International A-level only
Risk and uncertainty	Explain why assessing and planning for risk and uncertainty matters; identify financial, strategic, operational, compliance, reputational and cybersecurity risk; weigh seven methods of managing risk and two of managing uncertainty; explain four ways of developing an agile business	International A-level only

Assessment. Questions on 3.4.6 appear in the Unit 4: Business strategy paper, a 1 hour 45 minute written exam. The paper carries 80 marks, counts for 30% of the International A-level and is built around two case studies, each followed by five short answer and extended response questions.

Implementing a strategy names staff resistance and strategic drift as reasons strategies fail; this topic shows how to manage them.

1. Why businesses change

Velmoray Textiles weaves cotton fabric for clothing brands. Over two years it has replaced half its looms with automated machines, closed a warehouse and started selling direct to small designers online.

Internal reasons start inside the business:

• a new chief executive or owner with different priorities;
• new objectives or a new strategy, such as growth into a new market;
• poor performance (falling profit, rising costs, high labour turnover) that forces action;
• growth that outstrips the current structure, systems or premises;
• a decision to adopt new technology or processes.

External reasons start outside it:

• technology: cheaper automation or new sales channels;
• competitors: a rival cuts prices or launches a better product;
• economic change: wage rates, interest rates, exchange rates;
• legal and political change: new safety, employment or environmental rules;
• social change: customers’ tastes and buying habits shift.

At Velmoray, rising wage costs (external) and a new owner wanting faster delivery (internal) drove automation. Say which type each trigger is and why it forces change now.

2. Change and its stakeholders

Change creates winners and losers, and the same group can gain in one way and lose in another.

Stakeholder	Possible advantages	Possible disadvantages
Employees	New skills, more interesting work, job security if the firm becomes more competitive	Job losses, stress, retraining burden, loss of familiar teams
Managers	Chance to lead, better results to report	Heavier workload, blame if the change fails
Shareholders/owners	Higher long-term profit and value	Short-term costs cut profit and dividends
Customers	Better products, lower prices, faster service	Disruption while systems change, loss of a product they liked
Suppliers	Bigger or longer orders if the firm grows	Lost contracts if the firm switches supplier or brings work in-house
Local community	New investment and skilled jobs	Redundancies, closure of a site

Velmoray: designers gain faster samples; loom operators fear redundancy; shareholders see profit dip in the year the machines are bought. State which stakeholder, what changes for them and why interests conflict.

3. Barriers to change

Barriers include cost, lack of skills, an entrenched culture and a lack of management time. The specification names Kotter and Schlesinger’s four reasons for employee resistance to change:

Reason	Meaning	Example at Velmoray
Self-interest	Staff expect to lose something they value: pay, status, a job, overtime	Senior weavers lose overtime and the respect that came with running the old looms
Misunderstanding and lack of trust	Staff do not understand the change or doubt managers’ motives	A rumour spreads that the warehouse closure is the first step to selling the business
Inertia	Staff prefer familiar routines; change feels uncomfortable even with no clear loss	Office staff keep using paper order sheets alongside the new online system
Different assessments of the situation	Staff judge the costs and benefits differently from managers	Supervisors believe the automated machines will cause more quality faults than they solve

Identifying the reason matters, because the right response depends on it.

4. Managing change

Lewin’s force field analysis

Force field analysis lists the driving forces pushing for a change and the restraining forces holding it back. Managers often give each force a strength score (for example 1 = weak, 5 = strong). Change is more likely when driving forces outweigh restraining forces. Managers then plan to strengthen driving forces and, usually more effectively, weaken restraining forces.

Worked example 1: Velmoray’s automation decision

Driving forces	Score	Restraining forces	Score
Rising wage costs	4	Fear of job losses	4
Buyers want faster delivery	5	Capital cost of machines	4
Falling price of automated looms	3	Skills gap among operators	2
Total	12	Total	10

Step 1. Total driving forces: 4 + 5 + 3 = 12. Step 2. Total restraining forces: 4 + 4 + 2 = 10. Step 3. Compare: driving forces lead by 12 − 10 = 2, so the change should go ahead, but the margin is narrow. Step 4. Plan action on restraining forces. A guarantee of retraining rather than redundancy for current operators could cut fear of job losses from 4 to 2, and a training course could cut the skills gap from 2 to 1. Restraining forces then total 2 + 4 + 1 = 7, a lead of 12 − 7 = 5.

Value and limits. It makes managers list every force and plan how to tackle each. But scores are subjective, so two managers may reach different totals, and forces shift over time.

Kotter and Schlesinger’s six ways of overcoming resistance

Method	What it involves	Best when	Drawback
Education	Explain the reasons for change and share the facts	Resistance comes from misunderstanding	Slow if many people are involved
Participation	Involve staff in designing the change	Staff have useful knowledge or could block the change	Time-consuming; staff may design a weaker change
Facilitation	Support: training, counselling, time off to adjust	Resistance comes from fear or a skills gap	Costly, and may still fail
Negotiation	Offer incentives, e.g. bonuses or early retirement terms	A group will clearly lose and has power to resist	Expensive; others may demand a deal too
Manipulation	Selective information or giving a resister a token role (co-option)	Other methods are too slow or too costly	Destroys trust if discovered
Coercion	Force: threats of job loss, transfer or dismissal	Speed is essential and managers have power	Resentment, lower motivation, possible staff loss

Match the method to the reason for resistance. Velmoray’s rumour about a sale (misunderstanding and lack of trust) calls for education, whereas the senior weavers’ lost overtime (self-interest) may need negotiation, such as a retained-pay period while they retrain.

5. Risk and uncertainty

Risk is the chance that an outcome differs from the plan, where the possible outcomes can be identified and, to some extent, estimated. Uncertainty describes situations where outcomes cannot be predicted or measured with confidence, such as a sudden change of government policy or a new technology that has not yet appeared.

Why assessing and planning matters: it protects cash and profit, keeps operations running, helps a firm meet legal duties, reassures lenders, investors and customers, and lets managers respond quickly instead of improvising under pressure. Too much caution has a cost too: a firm that avoids every risk may miss profitable opportunities.

Types of risk

Quillhaven Logistics runs a fleet of delivery vans for online retailers.

Type	Meaning	At Quillhaven
Financial	Borrowing, profit or liquidity problems	Van loans at variable interest rates; retailers paying 60 days late squeeze cash
Strategic	Big decisions such as entering new markets or launching new products	Starting refrigerated deliveries for grocers, where it has no experience
Operational	Disruption in production or supply chains	A breakdown at its only depot halts deliveries
Compliance	Failure to meet legal or regulatory requirements	Drivers exceeding legal working hours
Reputational	Damage from negative publicity or customer dissatisfaction	Videos of parcels being thrown over gates shared online
Cybersecurity	Attacks on IT systems and data	Ransomware locks the route-planning system and customer address data

Methods of managing risk

Method	Advantages	Disadvantages
Market research	Tests demand before a launch, cutting strategic risk	Costs money and time; results can be misleading
Contingency and crisis management plans	A ready response limits damage and speeds recovery	Takes time to write and update; may not fit the crisis that occurs
Insurance	Transfers the cost of insurable losses to an insurer	Premiums are a regular cost; some risks (e.g. a failed launch) cannot be insured
Diversifying products, markets or suppliers	Spreads risk, so one failure does less harm	Loses bulk discounts; stretches management into unfamiliar areas
Training	Reduces errors, accidents and compliance breaches	Costly; trained staff may leave
Forecasting	Spots cash shortages or demand changes early	Based on past data, so less reliable when conditions change
Cybersecurity measures	Firewalls, backups, staff awareness reduce attacks and recovery time	Ongoing cost; no system is fully secure

Worked example 2: matching methods at Quillhaven

• Late-paying customers (financial): a cash-flow forecast shows when an overdraft is needed, and a sales forecast helps size the fleet.
• Refrigerated deliveries (strategic): market research with grocers before buying chilled vans.
• Single depot (operational): a contingency plan to hire space at a partner depot within 24 hours.
• Drivers’ hours (compliance): training plus tracking software.
• Ransomware (cybersecurity): offline backups and staff training on suspicious emails.

Judgement. No single method covers everything; the mix depends on each risk’s likelihood and impact, and on what the firm can afford.

6. Managing uncertainty

Uncertain events cannot be predicted, so the specification names two broader approaches.

Scenario planning means describing a few plausible futures (for example “fuel prices double” or “a large retailer brings deliveries in-house”) and deciding in advance how the business would respond to each. Advantages: managers think beyond a single forecast, and responses are ready. Disadvantages: time-consuming, and the future that arrives may not match any scenario.

An agile business can sense change and respond quickly. Advantages: it adapts to whatever happens rather than betting on one forecast, and can seize new opportunities. Disadvantages: frequent change can unsettle staff and customers, and it can lack the cost efficiency of tightly planned operations.

Ways of developing an agile business

Tormead Bikes builds e-bikes and wants to react faster to new battery technology.

• Flat organisational structure: fewer levels of hierarchy, so information and decisions move faster. Tormead removes a management layer between the workshop and the directors.
• Empowerment: staff are given authority to make decisions in their own area. Workshop teams can change a component supplier within an agreed budget.
• Transformational leadership: leaders set an inspiring vision, encourage new ideas and develop staff, so people welcome change rather than resisting it.
• Cross-functional teams: staff from design, operations, marketing and finance work together, so new ideas are tested quickly from every angle.

Structure and empowerment also appear in the human resources guide; here, link them to speed of response.

Common errors

• Listing reasons for change without saying whether each is internal or external.
• Naming Kotter and Schlesinger’s methods without matching each to the cause of resistance.
• Treating force field scores as objective facts rather than managers’ judgements.
• Describing a “risk” that is really uncertainty, or naming the wrong type of risk.
• Recommending insurance for a risk that cannot be insured, such as a product flop.
• Saying a flat structure creates agility without explaining how it speeds decisions.

Official syllabus

OxfordAQA International AS and A-level Business (9725) specification, Version 1.1, for International AS exams May/June 2027 onwards and International A-level exams May/June 2028 onwards. Published by OxfordAQA.