Discontinuous, Volatile and Rapid Change - Coursework Example

Presented by: Presented to (Tutor): Course: Date 1.0 Introduction Managing organizations in today’s business world is becoming more and more challenging due to rapid, volatile and discontinuous change which has become part and parcel of the business environment. This is as a result of globalization and rapidly changing technological improvements. These forces have led to instability, uncertainty and constant changes in the business environment forcing firms to device more competitive strategies if they are to remain in business. As a result, the strategic management function is becoming more and more important in organization helping organization in to develop a set of goals, action plans and decisions required to achieve strategic competitiveness and earn more than just average profits. As a result of this rapid, volatile and discontinuous, strategic management managers must come up with flexible strategies that will be used to respond to the changes as they come. This essay will focus on the concept of rapid, volatile and discontinuous changes, its roles and impacts on the business environment and the models that are used to explain this change. 2.0 The concept of rapid, volatile and discontinuous change Rapid change means that it happens frequently, volatile change means that the change could be massive or it could be small and discontinuous change means that what was trending yesterday, may not be trending anymore and we cannot predict what will happen tomorrow. This change has had a lot of impact on the organization some positive and others negative. Some of the rapid changes that the organization experience are as a result of globalization and technological advancements (Alkhafaji & ‎ Alan, 2013). The next section will describe the impact of rapid, volatile discontinuous change. 3.0 Role, implication and Impact of change on organization In organization today is operating in the rapidly changing business environment and hoping that the rate of changing is going to change is merely a dream. Change in an organization is very important since without change there would be monopoly and businesses would not have competitive edge and would therefore fail to meet the emerging needs of the customers. Change has brought forth a lot of impacts as discussed below 3.1 Technological Advancements Change has helped many organizations cope with rapid technological advancements in the business world. When a business aligns its business the emerging technologies, it creates a competitive edge over its customers. An example of rapid change that affected many organizations was the introduction of Compact Discs in the 1980’s which affected many recording companies. However, those companies that quickly adopted that technological change realized a lot of profits since production of compact disks was cheaper than the LPs (Leigh,2014). 3.2 Cost of change Adapting to change takes time and in the process there is a lot of time lost in production and other expenses. Change process often requires communicating and training of the employees that will be affected by change. For instance, if an organization wishes to implement a continuous improvement system in the organization, it will require that the organization train all the employees on the process, tools and methods that the system will require if it is to become successful (Mitsuru Kodama, 2001). 3.3 Crisis Management At times, change is inevitable for an organization especially when it finds itself in a crisis. Change helps an organization rectify some of the processes that may have been ineffective. An organization may therefore adopt change so as to do away with processes that have become ineffective and hence help the business overcome turbulent times. Understanding change is very important for an organization especially when dealing with challenges such as increased turnover and incompatible culture which often arise from mergers and acquisitions (Quintus & Jennifer, 2005). 3.4 Globalization Change has brought about globalization which has been a threat and opportunity to organization. As an opportunity, globalization has enabled many organizations to produce their goods and services at a relatively low cost. It has also enabled many organizations to increase their customer base by accessing both local and international markets after globalization made the world a global market. as a threat, many organization have been faced out after they failed to adopt to take advantage of globalization leaving them less competitive than their competitors. In order to survive the threat of globalization, there is need for organizations to understand the regional and cultural differences in different markets (Philip &Walsh,2005). 3.5 Organizational Culture Many companies initiate change to improve their organizational culture. Changing the organizational culture, which could include basic beliefs, values, feelings, and internal and external relationships, can improve its efficiency and productivity. Effective organizational culture also attracts new customers, increases customer satisfaction, reduces costs of operations and increases worker retention. The top management of the organization is responsible for driving the culture change and needs to incorporate the workers in implementing these changes. Business owners need to retain the commitment of their employees during the process(Philip &Walsh,2005). 4.0 Models used to assess the role, impact and importance of change Organizations do not operate in vacuums. They operate in a business environment which is subject to rapid, volatile and discontinuous changes. They are connected to the outside world which has a constantly changing landscape. It is important for the business to analyze this environment and its features that will affect the performance of the business and then begin to make plans and decisions regardless of the uncertain future. The business environment is divided into external environment and the internal environment. The internal environment refers to those forces that are within the control of a business while external environment refers to those forces that are not in the control of the business. To understand the forces in the business environment, it is important for a company to conduct an external and internal analysis which is what is known as a situational analysis. A PESTEL analysis will help look at the external analysis and help assess the opportunities and threats and the internal perspectives will help review the strengths and weaknesses. A SWOT analysis will be used to assess the strengths and weaknesses from inside the organization and threats and opportunities from outside the organization. This section will be used to analyze the models that can be used to analyze the business environment. 4.1 PESTEL Analysis A PESTEL analysis is a model that is used to analyze the Political Economical, Social-cultural, Legal and Environmental forces that affect the business. This model allows the organization to identify the key changes in the environment in a well structured manner. A PESTEL model is simple and effective in identifying those forces in the macro environment that may affect the operation of the business. These forces can present the organization with threats or with opportunities(Viljoen,& Dann,2003). Therefore in conduct a PESTEl analysis, the organization aims to: Determine the current external factors (Political, Economical, Social-cultural, Legal and environmental) that may affect operations of business. After identifying those factors that are likely to change in the future. Determine how each of the factors is affects the type of business you are in and their likelihood of changing. For example, a software firm will be concerned about the technological factors which may include the rate of innovation diffusion and rate of change in technology which will result to obsolescence and product innovation. Public service organization may be more concerned about the political factors including changes in the birth rate, government spending and change in government policies. However, all firms will be concerned with the economical, legal and environment factors which affect all business at the same level. Exploit the changes which create opportunities for example government subsidies for investing in agricultural products or devise ways to cope with the changes which pose a threat to your organization better than the competitors. For example, a change like imposition of carbon tax to protect the environment is a threat to the business but the business can invest in technology that will reduce carbon emission to diversify the risk by investing in other businesses (Herzog, 2010). 4.2 Porter’s five forces model This model was developed by Michael porter who argued the industry is affected by five forces which affect the attractiveness of the industry. This model assesses the levels of risks, profitability and opportunities based on the five key factors in the industry. Companies can use this model to develop strategic competence over their competitors in the industry in a healthy competitive environment. The five forces that determine the long run attractiveness of the industry are: supplier power, entry and exit barriers, substitutes, buyer power and rivalry (Porter,2008). The model organizes the five forces, puts them in a strategic context and allows the organization to determine the impact of change. A change in any of the five forces will require that the organization reassesses the market place considering that this change will affect the whole industry and its attractiveness. For example even companies that are in very good conditions will always be affected by a change in the industry like threat of a new entrant who will reduce the overall return. In the case of such a company, devising a coping strategy will be their first priority. This is because Strong competitive forces affect the profitability of that industry and hence every company should be aware of these forces and device a good strategy to cope with the forces. It is important that every company understand that each and every industry has its own unique set of technical and economical characteristics that result to competitive forces. It is therefore important for the strategic manager device strategies that will help them adapt to the changing industrial environment (Porter,1979). 4.3 SWOT Analysis SWOT Analysis is a model that is used to understand the strengths and weaknesses of an organization while identifying the threats and opportunities that are faced by an organization. A swot analysis is an important to in development of a preferred future in a constantly changing business environment by helping the organization to understand itself. In order to respond to the paid, volatile discontinuous changes in the environment, the organization must understand both its internal as well as its external environment so as to develop a strategy and a vision that will link the two environments (Piercy &Giles, 2009). The purpose o a SWOT analysis is to analyze the internal environment and provide information on the strengths and weaknesses of an organization and match them with the available opportunities and threats that the company is facing. For example, may face the threat of rapidly changing technology which may pose the threat of obsolescence but it could also have strength of being innovative. It can take advantage of its strength of being innovative to create new products in line with the changing technological advancement. Changes in government policies say subsidies for production of certain goods could be an opportunity for the company to create new products to overcome its weakness of declined sales. Changes in technology can also be taken as an opportunity by aligning your business with the new changes. This will ensure that the organization is flexible and it can work with the changes that face it (Viljoen,& Dann,2003). 5.0 How CEO’s cope with rapid, volatile and discontinuous changes in the business environment The goal of every CEO in every organization is to achieve strategic competitiveness for their organization and earn above average profits in the increasingly competitive business environment. To cope with the rapid, volatile and discontinuous change in the business environment the CEO must develop flexible strategies that are going to easily adapt to the changes as well as have strategic plans that are continuously issue-focused. This means that the strategic plans have to be reviewed regularly as opposed to annual basis while ensuring that there is a clear link between the plans and the decision making (Philip R. Walsh, 2005). This simply mean that the CEO must be fast in making strategic decisions but at the same time ensure the decision are well thought out, carefully analyzed and any modifications that need to be made to the long term business plan as a result of this rapid changes is made. The CEO must continuously analyze both the internal and external environment to realize what threats or opportunities these discontinuous changes are presenting to the organization and quickly act to minimize the threats while taking advantage of the opportunities. References Alkhafaji A & ‎ Alan R.N (2013) Strategic Management: Formulation, Implementation, and Control in a Dynamic Environment. 2nd Edition. Routledge: New York Mitsuru Kodama, (2001) "Innovation through creation of strategic communities in traditional big businesses: a case study of digital telecommunication services in Japan", European Journal of Innovation Management, Vol. 4 Iss: 4, pp.194 – 215 Philip R. Walsh, (2005) "Dealing with the uncertainties of environmental change by adding scenario planning to the strategy reformulation equation", Management Decision, Vol. 43 Iss: 1, pp.113 – 122 Piercy N &Giles W, (2009) "Making SWOT Analysis Work", Marketing Intelligence & Planning, Vol. 7 Iss: 5/6, pp.5 – 7 Quintus R. J, Jennifer M. George (2005), Emergent Strategies and Their Consequences: A Process Study of Competition and Complex Decision Making, in Gabriel Szulanski, Joe Porac, Yves Doz (ed.) Strategy Process (Advances in Strategic Management, Volume 22), Emerald Group Publishing Limited, pp.387-411 Viljoen, J. and Dann, S. (2003). Strategic Management, 4th edition, Longman, Pearson Education, Australia. Chapter 1, pp. 3-15. Porter M.E (2008) The Five Competitive Forces That Shape Strategy. Retrieve on 4th march 2013 from http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/1 Porter M.E (1979) How Competitive Forces Shape Strategy. Retrieve on 4th march 2013 from http://prolog.univie.ac.at/teaching/LVAs/KFK-LM/WS07/Porter.pdf Leigh R (2014)Why Is Change Important in an Organization? Retrieve on 4th march 2013 from http://smallbusiness.chron.com/change-important-organization-728.html Herzog C (2010) Strategic Tools in Dynamic Environments. Deutschemark: Germany Read More