314522
Description
Mind Map by charcrawford, updated more than 1 year ago
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Created by charcrawford
over 10 years ago
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42. How firms respond to potential and actual change
- What changes
need to be
addressed?
- Operating in a changing environment is an inescapable reality
for businesses.
- Business success depends on how they respond to
potential and actual changes.
- Potential change = may be
needed in the future
- Actual change = have really
happened
- Short term changes = tactical
responses
- Long term changes = strategic
change
- Operating in a changing environment is an inescapable reality
for businesses.
- Marketing
strategy
- Product
porfolio
- 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
- Expecting economic downturn: sell
low-cost version. Political change: chance to
break into a new market
- Expansion or
reduction?
- Image shift
- External changes may prompt
shift in corporation image.
- UK company suffering from global competition gain
competitive adv. by pushing 'Britishness' of brand.
- UK company suffering from global competition gain
competitive adv. by pushing 'Britishness' of brand.
- External changes may prompt
shift in corporation image.
- Product
porfolio
- Financial
strategy
- Sources of
finance
- Changes requires
cash!
- i.e new product or laying
off staff
- i.e new product or laying
off staff
- Increased interest rates = borrowing
expensive Booming stock market =
expected dividend payments
- Analysis gearing ratio before
deciding appropriate source of
finance
- Changes requires
cash!
- Returning cash to
shareholders
- external change -> rationalisation
(sale of fixed assets). Firms may buy
back shares or return cash to
shareholders.
- Without increasing
operating profit, ROCE
will be boosted
- external change -> rationalisation
(sale of fixed assets). Firms may buy
back shares or return cash to
shareholders.
- Sources of
finance
- Operations
strategy
- Update
facilities
- Boost efficiency,
gains competitive
edge/ keeps up
with competitors
- Boost efficiency,
gains competitive
edge/ keeps up
with competitors
- New
location?
- changes -> increased
demand -> construction of
new facilties
- Increase
capacity
- Increase
capacity
- Take too long? - Firm can
subcontract
- changes -> increased
demand -> construction of
new facilties
- Subcontracting
- Quick to increase overall capacity. Offers greater
flexibility.
- However, poor treatment of workers? Lose control of operations? Quality
control problems?
- Quick to increase overall capacity. Offers greater
flexibility.
- Close
facilities
- Falling demand long term -> permanent closure. (Relocation to
different country)
- Expensive
(redundancies)
- However, will allow firm to reduce fixed costs
- Expensive
(redundancies)
- Falling demand long term -> permanent closure. (Relocation to
different country)
- Update
facilities
- HR strategy
- Right number of staff, right
skills, right place?
- Flexibility
- Create a staff with adaptable skills and keen to
embrace change
- Or, small permanent ('core') staff who
coordinate specialist contractors hired on
fixed-term contracts
- Create a staff with adaptable skills and keen to
embrace change
- Retraining
- Maintain flexibility, high levels of motivation
(staff feel valued)
- Maintain flexibility, high levels of motivation
(staff feel valued)
- Right number of staff, right
skills, right place?
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