Factors Driving Change in a Global Market
Business Management and Enterprise (Year 12) - People (U3)
Change involves altering the status quo. As a result, it is a lengthy process and needs to be tailored to the individual needs of the organisation.
Internal factors are those that are present from within the organisation itself:
Managers may want to introduce change. For example, if the cost of producing a certain part of a good is high, they may want to consider outsourcing. Managers may have personal goals, such as career progression, that influence their decisions regarding change.
Employees may initiate change to improve their working experience. This may involve collaboration to improve aesthetics. It could also be in the form of convincing other stakeholders to help support the change.
Competitor activity may drive change for a business. If competitors have begun using new technology to improve efficiency, a business might decide to follow in their footsteps.
External factors are those that are present from outside the business. They can be analysed using the PESTEL acronym:
Political decisions can impact a business. The stability of the government and the decisions it makes can encourage businesses to alter their ways of working.
Economic factors, such as the interest rates, inflation rate, and unemployment rate all impact a business’ decision-making process. Economic indicators allows businesses to assess the market and if they need to implement any changes.
Social norms are evolving, especially as cultures around the world are becoming more accepting. Consumption behaviours change and can be impacted by international events. The increased use of social media also impacts this social aspect.
Technology is rapidly changing and for a business to be successful, it is important to keep up to speed with these changes. The prevalence of AI, automation, and social media encourage businesses to change.
Environmental care is valued by many consumers. Businesses need to consider their environmental impact to ensure the brand is still accepted by customers.
Legal regimes continuously change within a country. Depending on the political system, new legislation may be frequently announced. A business should ensure that it is aware of these laws, to prevent any trouble.