BUSS 4: (4.7)
Managing Change
Organisations operate in a changing environment and change creates opportunities and
threats. Candidates should understand how businesses plan for and manage change, and how
external and internal change is linked.
Specification
section
Contents
Amplification
Internal Causes of Change
• change in organisational size
• new owners/leaders
• poor business performance
Changes in organisation size may come about
due to mergers, takeovers, organic growth
and retrenchment.
THE boss of Argos described a takeover bid from Sainsbury’s as
“opportunistic” this weekend, and said his attempt to turn around the high
street catalogue retailer was “not finished by a long shot”.
John Walden, chief executive of Home Retail Group, told The Sunday Times
that “we didn’t pursue this strategy thinking we needed partners”. He said:
“We do believe, as we build the transformation of Argos, we are building
for a business that anticipates a digital future, and that’s unfolding as we
expected.”
However, he left the door ajar to a deal with Britain’s second-biggest
supermarket, saying: “If there’s a way for us to realise this in a faster way
with a partner or multiple partners, that’s certainly something we and the
board would consider.”
Will the takeover work?
• Does the transaction fit with
– the capabilities of the firm?
– the corporate objectives of the firm?
– The culture of the firms?
E.g. a takeover involving diversification has a good
strategic fit for an objective of spreading risk by investing
in a variety of products and markets
Possible integration challenges…
Management roles &
responsibilities
Customer confusion &
reaction
Financial & IT systems
Marks & Spencer
Poundland
Different cultures
You are merging Surbiton High and
Guildford High
What issues do you need to consider?
Retrenchment
The cutting back of an organisation’s
scale of operations
‘Sticking to the
Halting recruitment or offering early
retirement/ voluntary redundancy
Knitting’ –
sticking to what
you do best
Delayering / restructure
Closing a factory, outlet or division
of the business
Making targeted cutbacks &
redundancies
Look at the examples of retrenchment provided
Think about the following:
• Which strategy below they have used to cut back on the scale of
operations
• What were the motives?
• What are the issues with doing this? (Think FMOP)
Halting recruitment or offering early
retirement/ voluntary redundancy
Delayering / restructure
Closing a factory, outlet or division of the business
Making targeted cutbacks & redundancies
To what extent is it inevitable that
a strategy of retrenchment will end
in failure?
Arguments in support
Counter- arguments
 The need for retrenchment suggests
some fundamental competitive
weaknesses in a business that will be
difficult to resolve
 Retrenchment is a normal part of
strategic decision making – many
businesses decide to refocus their
activities and often succeed
 Retrenchment is often the right strategy
during an economic downturn and once
implemented can leave a business in a
much stronger competitive position