The Nature & Impact of Change (AQA A Level Business): Revision Note

What is change?

• Business change is any significant shift in how a business operates, is organised, or competes, moving away from an existing way of working towards a new one

  • Change can affect almost any part of a business, including its strategy, structure, products, processes, technology or culture

• Planned change is where a business deliberately decides to change in advance as part of its strategy

• Reactive change is where a business is forced to change quickly in response to an unexpected event or pressure

Benefits of change

Incremental change

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

Disruptive change

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

Reasons for change

Internal reasons for change

External reasons for change

Change and stakeholders

• Change rarely affects every stakeholder group in the same way

  • What benefits one group can disadvantage another

  • This is why managing change well requires considering its impact across all of them

Employees

• Change can bring a range of advantages for employees

  • New training opportunities

  • Career progression in restructured roles

  • Improved working practices, such as more flexible or hybrid working arrangements

Example

Unilever trialled a four-day working week in some of its markets, including New Zealand, between 2020 and 2022

Employees reported significantly improved wellbeing and work-life balance without any reduction in pay

• However, change can also cause problems for employees

  • Job insecurity due to the risk of redundancy

  • Increased workload during a transition

  • Cause stress as a result of having to learn new skills or processes

Example

British Airways' restructuring during the COVID-19 pandemic in 2020 involved significant redundancies and a controversial fire and rehire process for remaining cabin crew, causing considerable anxiety and disputes with trade unions

Shareholders

• Well-managed change can improve long-term profitability and share price

  • This can protect and potentially grow the value of shareholders' investment

Example

Microsoft's strategic shift towards cloud computing under chief executive Satya Nadella from 2014 led to a huge increase in the company's share price over the following decade, rewarding shareholders who had backed the change

• However, the short-term costs of change, such as restructuring or redundancy payments, can reduce short-term profit and unsettle investor confidence

Example

BT Group's share price fell when the company announced large-scale job cuts and restructuring costs in 2023, despite the changes being intended to improve long-term profitability

Customers

• For customers, change can bring improved products, services or customer experience, particularly where new technology is involved

• However, the transition period can create problems

  • Service quality may be disrupted

  • Changes to products, pricing or policies can confuse or frustrate existing customers

Example

X's (formerly Twitter's) changes to its features following its change in ownership in 2022 caused significant confusion and disruption for existing users

Suppliers

• For suppliers, a business that is growing or changing strategy may offer suppliers increased orders or new opportunities to innovate together

• However, a change in strategy can threaten existing suppliers' revenue if orders are reduced, contracts are renegotiated, or the business switches to a different supplier

Example

When Boeing significantly cut its output following the 737 MAX crisis, key suppliers such as Spirit AeroSystems saw a sharp fall in orders and revenue

Local community and government

• Positive change, such as new investment or job creation, can benefit the local economy by creating employment and increased tax revenue

Example

Nissan announced a £2 billion investment at its Sunderland plant in 2023, including new electric vehicle models and a battery gigafactory, creating thousands of jobs and significantly boosting the local economy

• Negative change, such as site closures or relocation, can seriously damage local employment and economic activity

  • This can sometimes prompt government intervention

Example

In 2025, the UK government took control of British Steel's Scunthorpe site through emergency legislation to prevent the closure of its blast furnaces, protecting thousands of local jobs and the surrounding community's economy