Business Sources and Nature of Change

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Business Sources and Nature of Change

Category : Articles

Executive Summary
JB HI FI is an electronics store that has through its management adapting to change has been a success which is shown through its market share in that area. JB HI FI??™s Dominates stems from it identifying the need for change, setting achievable goals and its business culture.

This report will:
* Describe the sources and the Nature of change being experienced by business.
* Analyse how effective management has been in managing the change.

Sources and Nature of change

Nature and sources of change in a business result from either external or internal influences. External factors that influence a business are those that are generally outside of its control as internal influences are those which the business has greater control over. These forces of change have resulted in new responses and strategies from management of JB HI FI.

External influences
There are many external influences on JB HI FI. Since external factors cannot be controlled by the business it therefore needs to adjust operations in order to manage such external changes.
The changing nature of markets
Markets are dynamic. Consumer??™s wants are constantly changing. JB HI FI have noticed the consumers shift of expensive ???Out-of-home??™ purchases such as holidays to value for money ???in-home??™ purchases because of the recent period of economic uncertainty. Due to this JB HI FI has built on their reputation of ???everyday low prices??™ to capture the shift in buyer behaviour.
Economic and Financial
Economic forces have impacts on the business??™s capacity to compete and customers??™ willingness and ability to spend. The Australian dollar has fluctuated from US$0.68 July 2008 to a recent high of parity with the US dollar in October 2010. This has had limited influence as JB HI FI does not import directly and in Australian dollars from LG and Samsung. The recent high in the Aussie Dollar has resulted in cheaper goods which have been passed on to customers. They??™ve used hedging to protect their capital from much effect of inflation.
Geographic
Two major factors which will impact Australia??™s business activity is its location within the Asia Pacific and the growth in Asian nations which provides challenging opportunities for business expansion, sales and profit. Changing demographics factors influence a business??™s which lead to changes in demand levels and the nature of products and services. JB HI FI has adopted a growth strategy which is opening smaller shop front stores in shopping centres with smaller populations. They have a similar expansion in New Zealand markets which has brought geographical as well as financial diversity to the overall enterprise.
Social
Businesses need to respond to social and cultural changes as they provide new demands and opportunities which majorly impact on business success. This may include changes in beliefs, spending habits, work attitudes and business ethics.
Legal
The process of deregulation and regulation have in Australia have changed the way businesses must operate. Businesses have to follow laws such as environmental, consumer protection, OH&S which impact on how they operate. Music retailers in general have been hit by illegal downloading JB HI FI have included iPods in their product line to offset lose of profits in CDs and now is Australia??™s largest IPod seller.
Political
All organisations are required to interact with governments as they pay tax to them and are subject to government regulation. The ACCC and the ASIC are two of the government??™s regulators. A recent government handout of $900 has resulted in smoothing there revenue during the economic downturn.
Technological developments
New Technological advances have continually changed the way the businesses operate. New technologies have opened new markets JB HI FI have included the latest technology in their product mix to make sure they are a leader in new consumer technology.

Internal influences
Internal change rises from the desire to develop new and improved ways of doing things. Businesses have high degree of control over the internal environment.
Effects of accelerating technology including e-commerce
Before the internet all businesses were carried out in Brick and Mortar shops. Now that the internet in a common within homes, many businesses have launched and operate virtual shops. JB HI FI combines a physical store and online web-enabled shop which has increased their market share.
New systems and procedures
New systems and procedures are generally implemented to improve productivity. JB HI FI implemented wireless handheld computers to increase the stores productivity of in-store sales and services.
New business cultures
JB HI FI??™s behavioural approach to management has fostered a culture of change which allows them to constantly respond to the dynamic workplace, this culture of change is supported by employees who are passionate about their work which contributes to the decision making consumers make about buying their products.
Structural responses to change
Outsourcing
Businesses outsource to reduce costs and increase productivity. JB HI FI outsources its ???interest free??™ deals to HSBC bank as it is easier for them to deal with loans as they are specialist and can do a better job for consumers in that area.
Flat structures
The flattening of the business has resulted in fewer layers of management and a widening of span of control. The stripping back of the management layers is aimed at cutting costs and speeding up decision making to make JB HI FI more flexible and adaption to change.
Strategic alliances and networks
There is a strategic alliance occurs when two or more businesses join together combine their resources. JB HI FI has a strategic alliance with HSBC bank which is described above. JB HI FI??™s network structure includes electrical brands such as LG and Samsung as they provide the products JB HI FI sell as they don??™t produce the products themselves.

Managing change effectively
Identifying the need for change
Effective managers should always be scanning the environment, attempting to understand factors that will have an impact on the business. JB HI FI management noticed that their employees were spending great deal of time manually entering sales and checking price lists and catalogues. They identified the need for a more productive way to manage in-store sales and services. JB HI FI management was very effective in noticing the need for change contrasts to QANTAS which identified the need to change to cut down costs from high fuel prices, severe global downturn and competitor growth in all markets.

This strengthens the business so it may take full advantage of opportunities that favour its long-term survival in an increasingly competitive world.

This has impacted on the JB HI FI stakeholders. This has affected the consumers in a positive way as it has bettered the service they provide to them. LG and Samsung stakeholders have benefited from this as their products information can be found quicker and portrayed to the consumer which will mean increase in their sales. This has affected positively to the share owners as because of their increased profit it has contributed in the share price??™s growth. 2006 is when they noticed the need for change where the share price was $4.94 to $15.40 in 2009 this provides some evidence that identifying that JB HI FI has been effective in managing change.

Qantas on the other hand contrasts as due to its management not being effective in managing change in the global downturn has resulted in its shares dropping from $5.83 peak in 2008 to a recent $2.67. This has impacted negatively on share holders of Qantas.

Setting achievable goals
For change to be managed effectively it is essential that new goals are to be achievable. This means goals that are attainable and realistic. Unachievable goals will only cause cynicism among employees and damage relationships between employees and supervisors. Goals devised after consultation with employees and communicated clearly by management, have a much greater chance of being realised.
Management of JB HI FI decided that they should implement an electronic system for in-store sales and services. They set the goal of deploying 1500 wireless handheld computers in all their stores within 18 months. This goal can be classified as a ???smart goal??™ as it is specific, measureable, achievable, and realistic and timed.
This is similar to Qantas as they also set ???smart goals??™ after consultation with employees communicated clearly with their management. Consultation uses effective management skills which will help ensure the success of business entity.
Negative short term effects are less profit in the immediate future as they need money to buy and deploy the units and decreased productivity from training staff. Positive short term is increased morale from staff and customers see the increased effort to better their service for them which creates consumer happiness, new stakeholders who provide the technology.
Negative long term effects are it may lose the formula the makes JB HI FI great and my never be able to get it back. Positive long term effects are increased profit, better customer satisfaction which leads to higher share price which will overall satisfy stakeholders.
Evidence that supports this was when they started to implement them from 2006 to 2007 profit only increased 27% opposed to from when they finished implementing them in 2007 to 2008 which profit increased 43%.
Creating culture of change
Adopting changes to work procedures or organisational structures requires a degree of risk taking by the participants. For employees and managers to be prepared to take such risks the business culture needs to be supportive. A change agent can be used to make the change easier.

JB HI FI had already created a culture which embraces constant change and new technologies. Therefore, the employees were open to a new electronic system and procedure for in-store sales and services.

Qantas differed as they had to create this change to do this they had change agents, whom they take responsibility for managing the change process.

Catalysts, solution givers, process helpers and resource linkers are all used to change a culture.

JB HI FI??™s ready culture to adapt to change has made the goal easy to achieve which has resulted in sustained profits as it didn??™t drag out longer than needed and the willingness of the staff made it faster which limited costs for training as the staff wanted to learn.

Force-field analysis
Driving forces for wireless handheld computers for in store sales and services:
* Increased sales and efficiency
* Improved stock control
* Improved customer service
* Enhanced communications with staff
Restraining forces for wireless handheld computers for in store sales and services
* Financial costs- Purchasing new equipment, software, setting up wireless networks and retraining staff.
* Staff- having to acquire new skills
The driving forces outweighs the restraining forces
Lewin??™s unfreeze/change/refreeze model
After the force-field analysis JB-HI-FI was able to effectively implement the change through the unfreeze/change/refreeze model.
Unfreeze
* Testing various handheld computers
* Selecting software
* Trailing in several stores
Change
* Training employees
* Deploying the handheld computers in all stores
* Installing wireless networks in all stores
Refreeze
* Continual training employees
* Providing technical support for new system
* Continually updating software
* Maintaining and repairing computers
In conclusion a business has many factors influencing it to change including external and internal. If the business manages change effectively like JB HI FI has and QANTAS in some instances have they will succeed in today??™s ever changing market. If they don??™t have the willingness to change they will increase their chances of failing enormously.