Unit 1 – Business and the Business Environment

4.3 Organisation operations

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4.3 Organisation operations
§ 4.3.1 Transformation process and overcome resistance to change

§ 4.3.2 Crisis management and recovery

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Changing Business Environment

§ In a business environment, change may not always be

welcomed but it is expected.

§ Changes in the business environment happen all the time.

The economy fluctuates up or down daily, frequently
causing businesses to alter the way they operate.

§ To face the dynamic environment won over its impact, its

essential for an organization to adapt a Change Management
System within the boundaries of the business.
 Resistance to Change

§ Resistance to change is a natural human instinct.

§ Change is scary and challenging. Maintaining an existing habit is easier than changing.
Trying something new means there is a possibility of failure.
§ But since change is inevitable, instead of resisting changes the organizations must try to
implement them with minimum hassle.
§ Scared of the unknown, within an organization, the fear of the unknown can mean job
uncertainty and unpredictability.

§ So, employees who can’t understand the

reason for the change will see it as some form
of threat to their job security and therefore,
resist it.

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Reasons for Resistance to Change
§ This includes :

ü Individual Factors
ü Organizational Factors
ü Social Factors

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Types of Resistance to Change
§ Logical Resistance:
- Time taken to adapt and adjust to changes

§ Psychological Resistance:
- Occurs purely due to mental and psychological factors.
Eg: fear of the unknown, less tolerance to change,
dislike towards the management, etc.

§ Sociological Resistance:
- Relates not to individuals but rather to the common
values and customs of groups.
Eg: Work place peer pressure

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 Transformation Process to
response the changing market environment
§ Transformation planning is a process of moving the organization from an "as is" state to a
"to be" state through the modification of policies, procedures, and processes.
§ The change can be managed by the following the below steps :
1. Define the change.
2. Select the change management team.
3. Identify management sponsorship and secure commitment.
4. Develop implementation plan including metrics.
5. Implement the change in stages, if possible.
6. Collect and analyze data.
7. Quantify gaps and understand resistance.
8. Modify the plan as needed and loop back to the implementation step.

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What is a Business Crisis?
§ A business crisis occurs when an
unexpected problem puts the stability of
a company or organization at risk.
§ These dilemmas can either originate
internally or they can be brought on by
external influences.
§ The problem affecting the business
escalates to the point where it's out of
the company's control and they can't
resolve it.
§ Unplanned events can have a
devastating effect on small businesses.

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Crisis Management Process
Crisis management can be divided into three
phases:
The crisis
• Pre-Crisis: Prevention and preparation for a management plan is
potential crisis a component of the
overall business
• Crisis Response: Responding to the crisis continuity plan.
• Post Crisis: Fulfilling all commitments that were
made during the crisis and looking for better
ways to prepare and respond to the next
possible crisis.

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Types of Crisis
1. Financial Crisis

2. Personnel Crisis

3. Organizational Crisis

4. Technological Crisis

5. Natural Crisis

6. Confrontation Crisis

7. Workplace Violence Crisis

8. Crisis of Malevolence

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Stages of Crisis

• These stages occur during a crisis and can help you determine how you should respond
to the situation at different points in time.

1. Warning
2. Risk Assessment
3. Response
4. Management
5. Resolution
6. Recovery

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 Analyzing Business Environment :
Broader Approaches
§ Environmental analysis is the process of scanning the environment to identify
changes or trends that have the potential to generate opportunities and threats to
the organization's current or future intended strategies.
§ Analysis Tools can be used to detect the changes :
ü Porter’s Five Forces
ü Scenario Planning
ü Delphi Method
Porter’s Five Forces
§ Porter's Five Forces of Competitive Position Analysis were developed in 1979 by Michael
E Porter of Harvard Business School.

§ A simple framework for assessing and evaluating the competitive strength and position of
a business organisation. It presents :

ü Five forces that determine the competitive intensity and attractiveness of a market

ü The strength of an organization's current competitive position, and the strength of a

position that an organisation may look to move into.
Porters Five Forces Model
 Scenario Planning
§ Scenario planning is making
assumptions on what the future is going
to be and how your business
environment will change overtime
considering that of future.

§ Having planning in place allows the

business to respond to conditions more
quickly and effectively.
 Expert opinion: The Delphi method
§ The Delphi method or Delphi
technique is a structured
communication technique or method,
developed as a systematic,
interactive forecasting method which
relies on a panel of experts.

§ It’s a Group work , but without the

participant's working together or
knowing each other
Limitations To Environmental Analysis
§ Unexpected and Unanticipated Events

§ No sufficient Guarantee

§ Uncritical Faith

§ To much information
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