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.
What changes do businesses face?
Internal
• Change in size
• Internal/organic growth
• Merger/takeover
• retrenchment
• Change in owner/leader
• Poor business performance
Can you give me an example
of each of these recently?
External
• Change in economic
environment
• Change in political and legal
environment
• Influence of technology
• Competition
• Change in the social
environment
Change in organisational size…
Internal
(organic)
growth
External
growth
Internal change – change in size
• Owners of many businesses are content with
remaining small, so why do companies want to grow?
Change in size – organic growth
• Also known as internal growth
• What does it mean
• Examples include:
External growth
Sometimes a business will see internal growth as too slow
– how else may they grow?
Link to pre-release
http://www.tutor2u.net/business/blog/royal-mail-goes-for-external-growth-to-help-e-commerce-deliver
Types of integration
Vertical
integration
Examples?
Examples?
External
Coming together
growth
of firms in the
same industry but
at different stages
of the production
process
Vertical
integration
Types of integration...
Coming together
of firms in the
same industry but
at the same stage
of the production
Horizontalprocess & in the
same market
integration
Conglomerate
integration
The coming
together of firms
operating in
unrelated markets
Poundland
http://www.tutor2u.net/business/
blog/problems-at-poundland
Cadbury and Ansoff
Ansoff’s Matrix for Cadbury Schweppes takeovers 2000 – 2007
a) Snapple (fruit-based soft, non-fizz drink, US-based) bought for £900 million in 2000
b) Slush Puppie (frozen soft drink) bought for £7.5 million in 2000
c) Dandy chewing gum (main brand Stimerol, Europe-based) bought in 2002 for £200m
d) Adams chewing gum (brands: Trident, Dentyne, US-based) bought in 2002 (after Dandy) for £1.5 billion
e) Green & Blacks (premium-priced organic chocolate, UK-based) bought in 2005 for £25 million
Reasons for external growth
• Growth often the overriding factor. Growth without
takeover or merger is generally slow
• Examples
• Synergy
• Means working together, the idea that the whole is greater
than the sum of the parts
• Revenue synergies
• Cost synergies
Synergy – revenues
• Synergies after a takeover/merger can mean
increased revenues of the combined group:
Deeper learning: Further Enquiry
Resources you have:
• Historic takeover stories & mini
case studies (A02)
• Success or failure? (A03, A04)
• What step of the process did they
trip up on?
• Find a recent takeover story?
http://www.tutor2u.net/business/t
opics/takeover
• Top 10 associated keywords?
• Make FMOP links?
Pre-release link: EBay and
PayPal