causes of change for the business
Answers
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Social factors and changes in consumer tastes - consumer expectations and tastes change over a period of time and firms need to adapt to this. For example, the growth in sales of organic and Fairtrade products in recent years has forced many food producers to adapt their product ranges.
Market changes - new competition, changes in the structure of markets and other factors will affect how firms operate. For example, the growth of the European Union and the emergence of many other free trade areas around the world has changed the structure of many markets and led to more competition as tariff and other barriers are broken down.
Population changes - changes in the population structure will mean that firms need to change. This may be because of changes to the potential supply of labour to the nature of their markets in which they operate. An ageing population in many developed countries will result in shortages of workers as well as changes in the pattern of demand for goods and services.
Technological developments - changes in technology have led to new opportunities, both in production terms, but also in terms of product development. Recent years have seen a plethora of new technology-based products emerging.
Answer:
CAUSES OF CHANGE
The causes of change in business can be categorised into internal and external:
INTERNAL CAUSES OF CHANGE
This is change caused by decisions taken by the business itself. These can include:
Restructuring: when a business is in financial difficulties it may choose (or have) to undergo a process of "restructuring". This usually involves changes to the capital structure of the business to reduce the amount of debt, as well as reductions in the scale and scope of the business' activities (e.g. closing down business units)
Delayering: this involves removing one or more layers from the organisational hierarchy - the aim of which is usually to reduce costs and improve decision-making and communication through a flatter organisational structure.
New leadership: the arrival of new leadership is often followed by a change in business strategy and subsequent changes to the products and markets in which a business operates and how it competes. An attempt to change the organisational culture is also frequently a feature of change instigated by new leadership.
EXTERNAL CAUSES OF CHANGE
These causes of change are linked to changes in the external environment facing all businesses or businesses in specific markets and/or locations. Examples include:
Social trends / attitudes: for example the growing resistance by consumers to businesses using single-use plastic in products and packaging
Economic conditions: for example the economic uncertainty created by Brexit or the growth of protectionism in developed economies
Laws / regulations: for example changes to minimum pay requirements (National Living Wage), data protection (GDPR) and restrictions on advertising & selling.
Technological advances: a significant source of external change, particularly through the creation of new business models (e.g. streaming) to challenge existing, established business models.