change management

CHANGE MANAGEMENT BBA313

Assessing External Conditions. U3

Unit 3.

1. Review of the PESTLE and 5- Forces affecting an organization. Identifying key risks and opportunities that requires changes to be implemented within an organization. Using Cause – Effect Diagrams to analyze the impact of external factors.

2. The microeconomics opportunities and threats for changing. 3. Core concepts:

Review PESTLE factors. Porters´ 5 forces technique.

External Factors of Organizational Change?

Factor Description

Grow Opportunities. *New technology; *Access to new marketplaces; *New products and services; etc.

Competitive Pressure. When competitors use technology to grow, evolve, and gain an edge, organizations must adapt in order to keep up.

Technological Innovation.

With new technology comes innovation. *Digital adoption; *Business process changes; *The development of new products and services; *Customer experience transformation, etc.

New Paradigms.

Consider all of the technological developments in recent years – the internet, mobile technology, AI, and the blockchain. All of these are causing a massive paradigm shift in the way we live and work.

Changing Customer Demands.

*Customers may begin performing product research online rather than in the store; *Clothing may go in or out of fashion; * Food preferences may change over time.

External Factors of Organizational Change?

Factor Description

The Economy. *Downsizing, budget cuts, business process changes; or *increase investment in any number of areas; *tariffs, trade wars, trade agreements, regulations, etc.

Natural Events. *Natural Disasters; *International Conflict; *Commodity ; *Shortages or Surpluses; *Famines or Crop Surpluses.

Mergers and Acquisitions. *Restructuring; *Cultural changes; *Changes to business processes; *Recruitment or layoffs; *Rebranding.

Social Change. *Norms; *change in level of education, * urbanization; *migration etc.

6 ways organizations will reinvent in 2022-2023

Platform and Marketplace

•New jobs.

•New ways.

•New models.

Organizations respond creatively

• Change in consumer demand.

• Industry mush-ups.

Organizations get +fluid

• Project based.

• Flat.

Production become

+personalized

•Tech. reshape

The making, marketing, and selling.

Increase human productivity w/machines

• Focus on the capability people and technology can offer.

Organizations reinvent how the job gets done

Formalize hybrid models of working.

6 ways organizations will reinvent in 2022-2023

Organization Dimensions

Managers strive in their company policy, to at least minimally satisfy the interests

of all stakeholders.

What is a PESTEL Analysis?

PESTEL Analysis | Overview, Factors, Examples, and Financial Analysis - YouTube

A PESTEL analysis is a strategic framework commonly used to evaluate the business environment in which a firm operates.

The framework is used by management teams and boards in their strategic planning processes and enterprise risk management planning, innovative product and market initiatives, as well as within the financial analyst community.

Key points from a PESTEL analysis can be incorporated into other industry and firm-level frameworks, such as Ansoff’s Matrix, Porter’s 5 Forces, and SWOT Analysis.

Contexts that a business should assess

https://blog.fhyzics.net/hs-fs/hubfs/pestel.png?width=657&name=pestel.png

Factor Description

Political. Those driven by government actions and policies. *Corporate taxation; *Other fiscal policy initiatives; *Free trade

disputes; *Antitrust and other anti-competition issues.

Economic. Economic factors relate to the broader economy and tend to be expressly financial in nature. *Interest rates; *Employment rates; *Inflation; *Exchange rates.

Social .

Tend to be more difficult to quantify than economic ones. They refer to shifts or evolutions in the ways that stakeholders approach life and leisure, which in turn can impact commercial activity. *Demographic considerations; *Lifestyle trends, *Consumer; *Beliefs; *Attitudes around working conditions.

Technological.

How technological factors may impact an organization or an industry. *Automation; *How research and development (R&D) may impact both costs and competitive advantage; *Technology infrastructure (like 5G, IoT, etc.); *Cyber security.

PESTEL Analysis

PESTEL Analysis

Factor Description

Environmental.

PESTEL analysis will overlap considerably with those typically identified in an ESG (Environmental, Social, and Governance) analysis.

Recognize that changes to our physical environment can present material risks and opportunities for organizations. *Carbon footprint; *Climate change ; impacts, including physical and transition risks; *Increased incidences of extreme weather events; *Stewardship of natural resources (like fresh water).

Legal .

Emerge from changes to the regulatory environment, which may affect the broader economy, certain industries, or even individual businesses within a specific sector. *Industry regulation; *Licenses and permits required to operate; *Employment and consumer protection laws; *Protection of IP (Intellectual Property).

PESTEL Analysis

1

2

3

4

5

Business Trends 2023.

• Accelerated digital transformation

• Inflation and supply chain security

• Sustainability

• Immersive customer experience

• The talent challenge

https://www.youtube.com/watch?v=OLtobPnEQN0

Advantages: It’s a simple framework. It facilitates an understanding of the wider business environment. It encourages the development of external and strategic thinking. It can enable an organization to anticipate future business threats and take action to avoid or minimize their impact. It can enable an organization to spot business opportunities and exploit them fully.

Advantages and disadvantages of a PESTLE analysis

Disadvantages: Some PESTLE analysis users oversimplify the amount of data used for decisions – it’s easy to use insufficient data. The risk of capturing too much data may lead to ‘paralysis by analysis’. The data used may be based on assumptions that later prove to be unfounded. The pace of change makes it increasingly difficult to anticipate developments that may affect an organization in the future. To be effective, the process needs to be repeated on a regular basis.

PESTEL Analysis

PESTEL Analysis Template. pdf

PESTEL Analysis Case Study

https://www.bing.com/videos/search?q=pestle+analysis&&view=detail&mid=DA3ECF9C0B6F36C424E1DA3ECF

9C0B6F36C424E1&&FORM=VRDGAR&ru=%2Fvideos%2Fsearch%3Fq%3Dpestle%2Banalysis%26FORM%3D

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https://www.greatassignmenthelp.com/blog/pestle-analysis-examples/

Template

How to do a PESTLE analysis Follow these steps: 1. Identify the scope of the research. It should cover present and possible future

scenarios, and apply to the industry and areas of the world in which the business operates.

2. Decide how the information will be collected and by whom. Identify more than one person to gather data to bring diverse evidence and perspectives.

3. Identify appropriate sources of information. You may find areas of PESTLE are a bigger focus to your industry than others but exploring information for all of them will give you a bigger view of the external environment.

4. Gather the information – you can use the template below. 5. Analyze the findings. 6. Mark each item in terms of importance in relation to potential risk to the

organization. 7. Identify the business options to address the issues. 8. Write a discussion document for all stakeholders. 9. Disseminate and discuss the findings with stakeholders and decision makers. 10. Decide what actions need to be taken, and trends to be monitored.

PESTLE analysis tips

Some useful tips for carrying out a PESTLE analysis: 1. Collaborate - multiple perspectives can identify more risk. 2. Use expertise and resources within the organization. 3. Use PESTLE analysis alongside other techniques, such as SWOT analysis, Porter's

Five Forces, competitor analysis, or scenario planning. 4. Incorporate a PESTLE analysis into an ongoing process for monitoring changes in

the business environment. 5. Avoid collecting vast amounts of detailed information without analyzing and

understanding your findings appropriately. 6. Don’t jump to conclusions about the future based on the past or present.

https://www.cipd.co.uk/knowledge/strategy/organisational-development/pestle-analysis-factsheet?pdf=true

Porter’s Five Forces Model

Refers to a framework based on the competitive analysis, introduced by Harvard Business School Prof. Michael E. Porter.

The model determines the intensity of competition in any industry is a mix of five competitive factors operating in different areas of the whole market.

The framework is an outside-in strategy tool for the business unit that evaluates the attractiveness (profitability) of an industry. Thus, helps the business-persons to identify existing and potential lines of business.

Porter’s Five Forces Model

The model is all about taking offensive and defensive actions, to create and maintain a competitive position in the market and to cope with the challenges (five forces) successfully.

Porter’s Five Forces Model

Force Description

Threat of new entrants. Potential entrant is the major source of competition in the industry. The product range, quality, capacity, etc. , increases competition. *The bigger the entrant, the more intense is the competition. *If the entry is easy, then the level of competition in the industry is severe.

Bargaining power of suppliers.

Suppliers, also exert substantial bargaining power over the firms, by threatening to increase prices or degrade quality. *The number of suppliers in the industry is limited in number. *They offer the specialized product. *The supplier’s product is an important input, to the buyer’s product. *The product has a few substitutes.

Porter’s Five Forces Model

Force Description

Bargaining power of customers.

Buyer groups are likely to exercise power if, they are concentrated, products are homogeneous, the switching cost is low, and full information is available. This force not only affects the prices but also influences the producer’s cost and investments in certain circumstances

Threat from substitutes. Substitute products are offered at reasonable prices along with high quality, to the customers can radically change the competitive scenario of industry, especially, when the introduction is sudden

Rivalry among current players.

Its the rivalry among current players, Price competition Advertising battles New introductions Improving quality Increasing consumer warranties.

To conduct a Five Forces analysis:

1. Start by reflecting on how each force affects your business.

2. Then, identify the strength and direction of each force — which also

assesses your competitive position.

3. Now, ask yourself these questions:

A. Are there a lot of suppliers in my industry?

B. Is my buying power high or low?

C. Is there a substitute for my product or service?

D. Is it easy or difficult for new competitors to enter my market?

E. Is competition high or low in my industry?

1. Next, write down each of the five forces, and note the size and scale of

each, using your answers to guide you.

How to Use Porter’s Five Forces Analysis

https://blog.hubspot.com/marketing/porters-five-forces

Porter’s Five Forces Model template Case study

Microeconomic opportunities and threats

Microeconomics is the study of how individuals and companies make choices regarding the allocation and utilization of resources.

It also studies how individuals and businesses coordinate and cooperate, and the subsequent effect on the price, demand, and supply.

Industry analysis, for an entrepreneur or a company, is a method that helps to understand a company’s position relative to other participants in the industry. It helps them to identify both the opportunities and threats coming their way and gives them a strong idea of the present and future scenario of the industry. The key to surviving in this ever-changing business environment is to understand the differences between yourself and your competitors in the industry and use it to your full advantage.

Microeconomic opportunities and threats

Theories in Microeconomics

Theory of Consumer Demand:

goods and services consumption preference to consumption expenditure.

Theory of Production Input Value:

the price of any item or product is determined by the number of resources

spent to create it.

Production Theory:

how businesses decide on the quantity of raw material to be used and the

quantity of items to be produced and sold.

Theory of Opportunity Cost:

the value of the next best alternative available.

To correctly identify opportunities and threats to their product, marketing managers need to understand the marketing environment in which their products operate. Choose a product or service and determine how to make it available to the end user.

•Develop a distribution system for the product or service that you have chosen. • Give an overview of the following distribution channels: a) Channel levels: Direct versus indirect distribution, b)Channel organizations: Conventional, vertical, horizontal, and multichannel marketing systems, c) Analyze your target market’s needs, and explain what you know about your target market and what it wants from a channel of distribution. •Determine which of the following channel members you will use, and explain why: Indirect: Retailer, wholesaler, dealer, manufacturer’s rep, and so forth Direct: Catalog, telephone, sales force, and so forth. Discuss how many channel members you will use (intensive distribution, exclusive distribution, or selective distribution), and explain why.

Microeconomic opportunities and threats

Opportunity Analysis • Current global business environment: a changing landscape; •Current local service sector environment in Barcelona; • Opportunity: Trainings to create wow experiences.

Industry Analysis: •PESTEL; •PORTER´S 5 FORCES.

Competitor analysis and differentiation.

Microeconomic opportunities and threats

Business Impacts Analysis

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0

Line of business/Role

Impact Type Rating Notes

Customer and External Stakeholders

Operating Model/Organizational Structure

Processes & Procedures

People/Roles

Tech

Deliverable › Your Text Here

› Your Text Here

Implementation

Team Leader › Your Text Here

› Your Text Here

Implementation

Sponsor › Your Text Here

› Your Text Here

Risk Assessment

3

1

Identify the risk and assess the significance

and likelihood of it occurring and plan the

contingency.

› What risks may occur upfront?

› Identify the key concepts that may arise

along the way

Identify the risk and assess the significance

and likelihood of it occurring and plan the

contingency.

› What risks may occur upfront?

› Identify the key concepts that may arise

along the way

Identify the risk and assess the significance

and likelihood of it occurring and plan the

contingency.

› What risks may occur upfront?

› Identify the key concepts that may arise

along the way

Date of Risk

Occurring Brief Description of Risk Low Medium High

Mitigation

Action Approval of

Commencement

Date of

Commencement

Risk

No.

Cause - Effect Diagram .

A cause and effect diagram examines why something happened or might happen by organizing potential causes into smaller categories. It can also be useful for showing relationships between contributing factors. I t is often referred to as a fishbone diagram or Ishikawa diagram

•In the manufacturing industry, these are referred to as the 6Ms: 1-Methods, 2-Machines, 3-Materials, 4-Measurements, 5-. Mother Nature/Environment, 6-Manpower/People.

Cause - Effect Diagram .

•In the service industry, these are described as the 4S: 1-Surroundings, 2-Suppliers, 3-Systems, 4-Skill.

•In the marketing industry, cause and effect diagrams will often consist of 7Ps: 1-Product, 2-People, 3-Process/Procedure., 4-Promotion, 5-Price, 6-Physical evidence/Packaging, 7-Place/Plant.

Cause - Effect Diagram .

These are the best and most common practices when creating cause and effect diagrams. 1. Identify the problem. Define the process or issue to be examined. 2. Brainstorm. Discuss all possible causes and group them into categories. 3. Draw the backbone. Once the topic is identified, draw a straight, horizontal

line (this is called the spine or backbone) on the page, and on the right side, draw a rectangle at the end. Write a brief description of the problem in the rectangle.

4. Add causes and effects. Causes are added with lines branching off from the main backbone at an angle. Write the description of the cause at the end of the branch. These are usually one of the main categories discussed above. Details related to the cause or effect may be added as sub-categories branching off further from the main branch. Continue to add branches and a cause or effect until all factors have been documented. The end result should resemble a fish skeleton.

5. Analyze. Once the diagram has been completed, analyze the information as it has been organized in order to come to a solution and create action items.

Best Practices in Cause and Effect Analysis

Cause - Effect Diagram to analyze the impact of external factors.

Problem - Effect

Grow Opportunities.

Competitive Pressure.

Technological Innovation.New Paradigms.

Changing Customer Demands.

The EconomyNatural Events Mergers and Acquisitions.

References:

https://www.cipd.co.uk/knowledge/strategy/organisational-development/pestle- analysis-factsheet https://strategiesforinfluence.com/negotiation-frequently-asked-questions-faqs/ https://www.casequiz.com/ib-economics-commentary-1-microeconomics-32128/

https://www.smartdraw.com/cause-and-effect/