42. How firms respond to potential and actual change

Mind Map by , created almost 6 years ago

Chapter 42

Created by charcrawford almost 6 years ago
37. Introduction to external influences
Business Studies Unit 1
Business Studies Unit 2
Cells - Biology AQA B2.1.1
Legislative Branch
Mr. Vakhovsky
40. Impact of Government economic policy
39. Globalisation and development
38. Impact on firms of economic factors
41. Government policies affecting business
43. Business Ethics
42. How firms respond to potential and actual change
1 What changes need to be addressed?
1.1 Operating in a changing environment is an inescapable reality for businesses.
1.2 Business success depends on how they respond to potential and actual changes.
1.3 Potential change = may be needed in the future
1.4 Actual change = have really happened
1.5 Short term changes = tactical responses
1.6 Long term changes = strategic change
2 Marketing strategy
2.1 Product porfolio
2.1.1 Expansion or reduction? Expecting economic downturn: sell low-cost version. Political change: chance to break into a new market External changes may make existing products poor sellers
2.2 Image shift
2.2.1 External changes may prompt shift in corporation image. UK company suffering from global competition gain competitive adv. by pushing 'Britishness' of brand.
3 Financial strategy
3.1 Sources of finance
3.1.1 Changes requires cash! i.e new product or laying off staff
3.1.2 Increased interest rates = borrowing expensive Booming stock market = expected dividend payments
3.1.3 Analysis gearing ratio before deciding appropriate source of finance
3.2 Returning cash to shareholders
3.2.1 external change -> rationalisation (sale of fixed assets). Firms may buy back shares or return cash to shareholders.
3.2.2 Without increasing operating profit, ROCE will be boosted
4 Operations strategy
4.1 Update facilities
4.1.1 Boost efficiency, gains competitive edge/ keeps up with competitors
4.2 New location?
4.2.1 changes -> increased demand -> construction of new facilties Increase capacity
4.2.2 Take too long? - Firm can subcontract
4.3 Subcontracting
4.3.1 Quick to increase overall capacity. Offers greater flexibility.
4.3.2 However, poor treatment of workers? Lose control of operations? Quality control problems?
4.4 Close facilities
4.4.1 Falling demand long term -> permanent closure. (Relocation to different country) Expensive (redundancies) However, will allow firm to reduce fixed costs
5 HR strategy
5.1 Right number of staff, right skills, right place?
5.2 Flexibility
5.2.1 Create a staff with adaptable skills and keen to embrace change
5.2.2 Or, small permanent ('core') staff who coordinate specialist contractors hired on fixed-term contracts
5.3 Retraining
5.3.1 Maintain flexibility, high levels of motivation (staff feel valued)

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