
Understand how to
on:
› an organisation
› individuals within the organisation
› on the systems in use.

External changes are those changes which
organisations have no control over.

Changes might be caused by:
› Financial reasons
› Research
› Competition
› Other reasons

Examples could include:
› Changes in tax rates, such as VAT or income tax.
› Changes in interest rates which affect loan repayments
etc.
› Changes in minimum wage.
› Changes in exchange rates.

Examples could include:
› Changes in production techniques.
› Changes in the materials that are used for production.
› Different trends may become apparent which means an
organisation needs to adjust.
› Developments in ICT

Examples could include:
› Changes in production techniques that make competitors
more efficient which in turns allows them to lower their
prices and produce more.
› New products on the market.
› Special offers from competitors.
› Price of shares for other companies.

Examples could include:
› New Governments coming into power and changing policies
and funding.
› Updates to laws and legislation.
› Environmental changes.
› Pressure groups, such as Green Peace, can disrupt the
running of an organisation.
› Transport link changes, including new trains, buses and new
roads.

When external changes occur, an organisation
must respond in order to adapt to the change
successfully.

Responding too late can have negative outcomes
for organisations, which might have further
repercussions for other organisations!

Examples of this include the film and music industry
possibly reacting too slowly to the way people
accessed media content on the internet.

Worst case scenario, the impact on an
organisation is that it goes out of business.

Changes in things like income tax can have a
massive impact on organisations because it is
effectively a charge on earnings and profits.

A slightly worst case scenario could involve
redundancies and restructuring within the
organisation.

Its not all doom and gloom though…

Changes in the financial market could result in the
cost of borrowing going down.

This could mean that companies are willing to
spend more on R&D and come up with new
product lines (such as 3D televisions!).

This in turn might result in a growth in employment
and, again, some restructuring!

If a company goes under or is facing financial
difficulties then a person may end up losing their
job.

If a company is doing well then a person may find
themselves in a position to get a better job within
the organisation (promotions).

All these things may result in a person needing to
be retrained, work different hours (part-time or fulltime) or work in a different area of an organisation.

Some individuals might also get ‘head-hunted’ by
external organisations if they believe they would be
a valuable asset to their company.

This, of course, has an impact on the organisation
that loses their staff member.

Other external factors might include:
› Births
› Deaths
› Marriages

All these things could result in an individual having
to change they way they work.
› Part-time or full-time
› Flexitime
› Working from home

New production methods can influence change.

Change on a system can result from any external
change, such as changes in finances or in
competition from other organisations.

Systems sometimes need to be changed to deal
with these situations, and, in most cases, result in a
more streamlined system.

The change to a system could be in the form of:
› A system which has increased efficiency but requires the
same number of operators.
› A larger system to cope with extra requirements.
› A smaller system which requires less operators.

Read through the example scenarios on pages
201-203.

Complete the activities on page 203.

Answer the questions on page 203.

Explain the impact of new competition on an
organisation.
[6 marks]

Describe the impact that a downturn in the
economy can have on individuals within an
organisation.
[4 marks]