The Value and Causes of Change (AQA A Level Business): Revision Note

The value of change

• Change helps firms stay competitive, improve performance and respond to shifting market conditions

• Key benefits include

  • Adapting to market change

    • Keeping up with new tastes, preferences technologies or laws ensures products and services remain relevant, attractive and legal

  • Continuous improvement

    • Regularly refining processes and products lowers costs and raises quality over time

  • Driving innovation and growth

    • Change can spark new ideas, opening up additional revenue streams or markets

  • Managing risks

    • Updating systems and practices can prevent problems such as security breaches or supply chain breakdowns

  • Engaging employees

    • Involving people in improvement projects builds their skills and can improve their motivation

1. Incremental change

• A series of small, gradual improvements to processes, products or structures rather than a single large overhaul

• Incremental change is valuable for several reasons

  • Lower risk

    • Small steps are easier to test and reverse if they don’t work

  • Staff acceptance

    • Gradual change gives employees time to adapt, so there is likely to be less resistance

  • Cost-effective

    • Small tweaks usually use existing resources, avoiding the need for significant capital expenditure

  • Cultivates improvement

    • The habit of regular review helps catch minor issues before they grow

2. Disruptive change

• A radical shift that transforms an industry or market by introducing a new business model, technology or way of operating

• Disruptive change is valuable for several reasons

  • First mover advantage

    • Being the first with a major innovation can secure market leadership and build strong brand recognition

  • Rapid growth potential

    • Making a new market or completely changing an existing one can earn a business significantly more revenue

  • Outpacing rivals

    • Disruption can leave slower competitors struggling to catch up, increasing a business's market power

  • Long-term resilience

    • A bold reinvention can protect against future changes

Causes of change

Internal causes of change

External causes of change

Lewin's Force Field analysis

• Force field analysis involves managers identifying the driving and restraining forces that surround a strategic change decision

  • Once identified these forces can be analysed to determine whether a decision should go ahead

1. Driving forces

• Driving forces are factors that could justify that strategic change is needed

  • Internal driving forces may include:

    • Outdated machinery or product lines

    • Declining team morale

    • The need to increase profitability

  • External driving forces may include:

    • A volatile market

    • Disruptive technology, e.g. AI

    • Changing demographic trends

2. Restraining forces

• Retraining forces are factors that could prevent or limit change

  • Internal restraining forces may include:

    • Fear of the unknown

    • The existing organisational structure

    • "That's not how things are done here" attitudes

  • External restraining forces may include:

    • Existing commitments to partner organisations

    • Government legislation

    • Obligations towards customers

Weighting the forces

• Driving forces and restraining forces are weighted from 1 to 5 in terms of their relative importance

  • A value of 5 is most important and 1 least important

A simple force field analysis

Analysis of the force field above

• Four driving forces justify a decision for change

  • Their weightings are 5, 4, 3 and 2

  • The total value of these driving forces is 5 + 4 + 3 + 2 = 14

• Four restraining forces prevent or limit change

  • Their weightings are 4, 3, 2 and 1

  • The total value of these restraining forces is 4 + 3 + 2 + 1 = 10

• The relative weight of driving forces is greater than the relative weight of restraining forces

• There is a good chance that this decision would be successful

• To maximise the chance of success, driving forces could be further strengthened or restraining forces weakened/eliminated 

Evaluating the use if force field analysis

• Force field analysis is a valuable technique for assessing the factors influencing a situation

• However it has limitations, particularly in situations where precision is required

• It is most effective when used alongside other decision-making tools to ensure a comprehensive understanding of the situation

• Force field analysis has a range of strengths and weaknesses

Strengths and weaknesses