Change is the only constant in the world and organizations need to manage change in order to survive in the market place. There are rapid changes occurring due to many reasons. Organizations need to identify change triggers (need for change) and take necessary steps to implement appropriate change processes. Change triggers can be broadly catagorized into 02 namely,
- Internal Change Triggers
- External Change Triggers
Internal Change Triggers
This is where the factors which are under the control of the organization (within the organization) forces the organization to change to make changes. These could be managed easily as they are under the control of the management. Though internal change triggers can be managed easily there should not be any underestimation and management should pay relevant attention to internal change triggers. Some of the internal change triggers are explained below:
- Size of the firm- Increased in the size of the firm requires the scale of operations to be increased and vice versa.
- Production methodology- There can be changes in production methodology forcing the organization to change the way in which they operate the business.
- People- There can be changes in leadership/people forcing the organization for change. As an example if a new manager is appointed the way he manages the business would be different to that of the previous manager.
- Organizational structure- Sometimes there can be structural changes in the hierarchy of the organization. As an example, an organization which is managed in a top down approach may decide to adopt a bottom up approach which triggers a change in the whole business process.
External Change Triggers
This is where a change in the organization is identified/triggered as a result of a factor that is outside to the organization. The external change triggers are not under the control of management and most of the firms struggle to cope up with external change triggers.
There are 02 types of environment that creates change triggers namely,
- The Task Environment
- The General Environment
The Task Environment
This is the external environment of the organization which is more close to organization. Changes in the task environment directly affect the organization. Porters 05 forces model is used to explain change triggers of task environment.
- Buyer power- If the buyer power is high company has to adopt to what customers want and customer has power to change the organization into what they wish to see simply by buying products or refusing products.
- Supplier power- If the supplier power is high supplier will force the organizations to make changes to the business process by changing material prices, changing inputs, deciding credit period and so on.
- Threat of substitutes- Threat from the substitute may force the organization to make changes to the products to differentiate the product triggering a change in products.
- Threat of new entrants- Threat of new entrant will make the firm to create entry barriers to the industry by adopting new technology, building brand loyalty, making heavy investment and so on. These will trigger changes in business strategy.
- Rivalry among existing firms- When there is cut throat competition firms are forced to make certain changes such as changes in prices, changes in marketing tactics, changes in the quality of the product, introducing new products and so on.
The General Environment
These are the external environment factors which are more of general in nature. PEST (Political, Economical, Socio-cultural and Technological) factors will influence the organization in triggering changes from the general environment.