A2 Business Studies Answer Guide: Managing Change - Lemonfizz

Evaluate the importance of effective management of change for the future success of LF. (20 marks) [9707/33/M/J/2015]

Following is the comments given by the external examiner over the performance of students who sat for this paper and attempted this question.

"Candidates approached this question in two ways: the role that change management plays for LF or how LF might deal with changes it is planning to make in marketing, location or personnel (dealt with by a small minority). Both approaches were credited, although very few responses gained high marks. Candidates clearly were prepared for questions on strategy and many answers set out a strategic planning model, often setting out SWOT or PEST, with little relation to the question. Most answers described the role that effective management plays and failed to address the question of change and this made it difficult for Analysis marks to be awarded. These answers often quoted sections from the text with little or no comment. Better responses on change management considered various models or techniques for managing change such as Kotter’s 8 steps, project champions or involving the employees in various ways. These candidates gave reasons for using these methods (analysis) and attempted a consideration of the possible effects (evaluation). Better answers on planned change considered issues facing LF (e.g. replacing Tony Brown, entering country Z, introducing CSR, a new production line) and suggested methods to achieve these changes successfully."

From my observation of your answer, I find that many students fail to notice this question focus on "effective management of change" and not just "effective management".  As such, many who attempted to answer this questions failed to make any reference to the issue of change as they focus on writing about strategic analysis and the use of the environmental analytical tool without making any connection to the the issue of managing change.

Although the question ask about the effective management of change, if we look at the context of the question, it somewhat implicitly require students to discuss the various ways in which change can be effectively implemented.

Here are few ideas students can consider whenever they encounter issues on managing change.

• Set a clear objective to be achieved from the implementation of the change and communicate that objective it to the relevant members of the organisational responsible to bring the change to fruition.
• Be transparent.  Do not keep the organisational members of LF in the dark.  Uncertainty often leads to unnecessary speculation which will leads to the feeling of insecurity that can adversely affect the motivation of the employees within LF. This can subsequently hurt business performance and most likely result in resistance to change.
• Indicate what benefits that each member of LF can individually derive from the change instead of merely informing those affected how the change can bring benefit to the organisation.
• Engage the employees and allow them to provide input as to how the change can be effectively implemented.  Through this practice of employee participation, it will create ownership of the decision made and thereby allow the management to gain cooperation and commitment from the employees to support the change and implement it without or with little resistance.
• Nevertheless, change can be implemented forcefully and Tony as the CEO can threaten those managerial and non-managerial employees who cannot embrace his idea of change to remove themselves from the organisation or be removed by him.  However, this may not always produce a positive result as some out of resentment may purposely sabotage the effort of LF to undertake the change. However, if take a look at line 23, it is unlikely that Tony will take such a ruthless approach to force the employees within LF to accept the proposed change as this will most likely go against his value.

Following are some specific ideas that relate to the context of the case.

• Students should take note that in the context of the question, there is a plan to convert LF into public limited.  As such, Tony the CEO must find ways to convince the current shareholders to accept his proposal to change the legal structure by telling them the potential benefits in terms of higher economic return they can get if the business is to change to become public limited companies.  This will enable LF greater potential to pursuit its plan for business growth and increase its capability to make more sales to (hopefully) bring in greater profit.  Furthermore, Tony needs to highlight the fact that country Y has become more challenging for LF to operate in and thereby may yield profit if the business do not plan to engage the oversea market.
• With regards to the process of finding replacement, Tony should quickly find successor to avoid too much speculation among people within and outside the organisation.  He should consult the relevant people especially those among the Board of Directors and senior managers to determine who will be the most capable candidate as by getting their input can help the newly appointed CEO to be accepted among the relevant members of the organisation.
• The consideration of increasing marketing effort may be viewed as increase workload by the current members of the marketing department.  Tony must look into how he can possibly alleviate their concerns.  Perhaps, he can considered hiring more marketing personnel to support the increase marketing activities although this will mean increase in recruitment and labour costs.
• Effective management of change is essential to ensure undisrupted operation.  With regards to the change in the production lines, the affected production workers need to be told on what will be happening.  It is good that in the case itself that training is provided to alleviate fear of these workers of not being able to perform their job well. Yet, training by itself may not entirely solve resistance to change as some workers does not wish to learn something new as they are accustomed to the current way of working.  As such, the production managers will either have to talk to them and purpose even issue an ultimatum that after the change in the production process, if there is failure of anyone of these production workers to perform to a desirable standard, they may be dismissed from the organisation.  Nevertheless, a 'softer' approach can be made by promising these workers some attractive rewards perhaps in the form of financial incentives if they as an individual or a group are able to produce efficiently, with quality, and achieve the desired quota.

For those unfamiliar with Kotter's 8-Step Change Model can watch the video below.

Video: Kotter's 8 Step Change Management Model

It is not necessary for students to state and discuss each of the 8 Step of Change Management Model introduced by Kotter if they understand the essence of the those steps.

Create urgency, create a vision for change, and communicate the vision - all these will often relates to the issue of business communication which involves being transparency and indicating the importance of the change to them such as highlighting the rewards that those who will be affected will received.  Remember effective communication is essential.  Without such communication, the employees will be in the dark and they tend to speculate which will be unhealthy to their psyche if they speculate on the negative.

Form a Powerful Coalition - this step can relate to the issue of engaging those members of the organisation involved in the implementation of the change or that will be affected by the change to participate in decision-making process or a process of getting inputs of their reactions; by having such employee participation process enable the management build positive rapport with those people and win their support that is necessary to ensure that the change can be implemented effectively the the commitment and cooperation the relevant organisation members

Remove Obstacles - basically this requires students to give recommendations on what kind of support the management can give to allow them to cope the change and adjust themselves appropriately such as providing them training and the necessary resources in order to respond to the changed process