Business Understanding and Leading Change: A Report

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BUSINESS UNDERSTANDING AND LEADING CHANGE
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Table of Contents
Introduction................................................................................................................. 3
LO1............................................................................................................................. 4
LO2........................................................................................................................... 13
LO3........................................................................................................................... 18
LO4........................................................................................................................... 20
Conclusion................................................................................................................ 23
References................................................................................................................24
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Introduction
Leadership is a significant function of management, which is helps to maximise
efficiency and goals of organisation. Leaders play the role of motivating others for
obtaining better performance. In recent times, market condition is changing day by
day. Leaders play a key role in managing such changes. Change management
refers to the direct or indirect process in which an organisation manages their
resources according to the changes. The study will provide guidance on the
significance of leadership and change management. The analysis will be performed
on British Petroleum.
British Petroleum (BP) is a multinational oil company, which is headquartered in
London, United Kingdom. This organisation is considered as one of the seven
supermajors world. This organisation has expanded business in 70 countries
worldwide. It is stated that this company produces 3.6 million barrels of oil per day so
that it can be stated it is a large organisation (bp.com. 2019).
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LO1
Compare ways in which change impacts on an organisation’s strategy and
operations
In this section, the organisation will be compared to a popular furniture company
named as IKEA. IKEA is a Swedish company, which specialises manufacturing of
designs and ready to assemble furniture. This organisation is considered as one of
the most famous furniture store in whole world. Ingvar Kamprad founded the
organisation in 1943 in Sweden. In present times, the organisation is operating
business in more than 424 locations (ikea.com. 2019). Driving factors of change of
both the company will be provided here:
BP Changes Drivers of
change
Impact on
strategy
Impact of
operation
Diversified
interest
Diversificatio
n of products
Competition in
the global
market has
been
increased.
Other
competitive
companies
have updated
their product
portfolio. This
change is
posing threats
for the
company in
Global market
(Pollitt, 2017).
The
management
of this
organisation
has changed
traditional
product
portfolio. This
was an
effective
strategy for
increasing
sales of the
company. This
strategy
changes has
helped this
organisation to
diversify its
BP has
extended its
key area of
operation to
number of
areas. The
organisation
has been able
to generate
more revenues
such as
Amoco,
ARCO, BP
Express, BP
travel centre,
and others.
This change
has left a
positive impact
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risks. on the
operations of
organisation.
Controversies Issues of oil
spill
Issues oils
spills occurred
in several parts
of the world,
which has
affected
marine life and
sustainability.
This has
created issues
of
controversies
and affected
the brand
image of this
company.
According to
recent reports,
the company
faced issues of
controversies
due to oil spills
in various
places of the
world (Yemen
et al., 2017).
The oil spill
has affected
sustainability
of the
organisation.
This incident
has also
resulted into
loss of lives to
marine life. BP
will have to
change its
marketing
strategies and
develop new
strategy for
avoiding such
controversies.
Controversies
have affected
the brand
image of this
company so
that the
company
required
changing
traditional
system of oil
carrying. The
employees of
this
organisation
have become
more attentive
so that they
can be able to
avoid these
issues in future
time.
Economic
changes
Inflation rate,
tariff and tax
External trade
in oils and gas
Dollar has lost
nearly 15% of
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rate
fluctuation
Brexit has
affected
economic
conditions
negatively, as
the inflation
rate rose to
2.7% (Forbes
et al., 2018).
Additionally,
the GDP of this
country has
been reduced
by 2%.
has been
affected due to
the Brexit and
economic
recession has
been
increased by
3.8% (Ramiah
et al., 2017).
The sales rate
of this
company may
decrease so
that the
organisation
will have to
develop new
strategies for
attracting new
customers.
Additionally,
its original
value due to
Brexit (Dritsaki,
2017). It is
known that
crude oil
remains in a
correlation with
the foreign
exchange rate
of any country.
Oils are priced
in dollars so
that this
change will
affect the
revenue
generation
process of this
organisation.
The
organisation
will have to
plan new
activities for
covering
deficits.
Political
instability in
UK
Brexit
Britain has
recently
decided to
leave the
membership of
British
petroleum has
5% of EU
workers who
will have to
leave the job
The company
will have to
recruit new
people for
continuing their
business. It is
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European
market. This
condition is
posing threats
for several
companies, as
this company
will not be able
to expand
business in the
markets of UK.
due to the
political
instability in
this country.
EU laws and
legislation will
be changed
and new
legislation will
be published,
which can
leave a major
impact on the
organisation.
The
organisation
will have to
develop new
strategies for
maintaining
their business
growth.
stated that
90% of
workers of this
organisation
are UK
national so that
the resignation
of EU nationals
will leave a
negative
impact on the
organisation.
This industry is
also facing a
major price
crash due to
this condition.
Table 1: Drivers of changes in British Petroleum
(Source: created by the learner)
IKEA Changes Drivers of
change
Impact on
strategy
Impact of
operation
Political
instability in
UK
Brexit, import
and export
laws
Political
condition of UK
has become
IKEA has
developed new
strategy for
opening new
stores in UK,
which will be
The news laws
that have been
published
recently
affected
business
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unstable after
the
announcement
of brexit.
affected by the
laws published
by new political
party. The
organisation
will need to
develop new
strategies for
expanding
business in
markets of UK.
In this way,
these changes
will leave an
impact on the
business
strategy of
IKEA.
expansion of
IKEA. This has
been stated
that the labour
market of UK
has been
influenced
negatively due
to this
condition. The
organisation
will lose its EU
workers, which
will slow down
speed of
working.
Economic
changes
Inflation rate,
Economic
recession,
GDP changes
The economic
condition of
this country
has been
changed by
the fluctuation
rate in UK.
This
organisation
uses
reasonable
pricing
strategy.
Inflation rate
has been
increased so
that the
organisation
will have to
product prices
for maintaining
their profit
It has been
observed also
that the wages
of UK citizens
have been
lowered due to
the economic
instability of
this country.
Buying attitude
of customers
has been
influenced
negatively due
to this
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margin.
Therefore, the
competition in
the markets of
UK has been
increased also.
In this
condition,
company will
have to use
competitive
pricing strategy
for obtaining
better results.
Thus, it can be
observed
pricing strategy
of the
organisation
will be affected
due to this
condition.
condition. The
company has
faced lower
customers.
The
organisation
will have to
change its
business
operations by
positioning low
cost products
for the
customers.
Pricing policy Low cost
business
model
Competition in
the market is
the main
reason behind
the changes in
cost leadership
model
IKEA has
recently
changed their
business cost
model so that
they can be
able to attract
more
customers and
boost their
sales level.
Management
of this
company has
developed new
working plan
by
implementing
this strategy
into the
working
procedure
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The company
used to stick to
a traditional
model and now
it has brought
innovation to
the
organisation,
which was an
important step
for achieving
competitive
advantage in
the market.
The
organisation
has been able
to drive a huge
traffic with the
help of this
new strategy.
(Schneider and
Bermudez,
2018). It has
been stated
also that the
business
model is being
copied by
other business
organisations.
This has left a
negative
impact on the
organisation. A
new working
plan needs to
be developed
for operating
business in the
market.
Large size
business
Business
expansion
Increasing
opportunities
of the global
market was
main reason
behind such
changes
This company
has expanded
business in
international
market.
External
factors of
different
countries are
dissimilar so
that the
organisation
The
organisation
operated
business in
more than 50
locations
(Müller, 2016).
Business
expansion has
not left major
impact on the
business
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has developed
new strategies
for maintaining
business
operation in
different
markets. In this
way, the
traditional
strategy
making
process has
been
influenced.
operation
process.
Table 2: Drivers of changes in IKEA
(Source: created by the learner)
After evaluating both the tables, it has been evaluated that the political condition
leaves a major impact on both the organisation. These organisations have
developed new strategies for managing the changes in market. The recent political
factor Brexit, is leaving a negative impact on the business operation. Political parties
have been changed in UK so that the new rules and regulations have been
established in this country. These companies will have to follow new import and
export while operating business. IKEA may face some challenges while expanding
business to other markets of this country. BP will be able to achieve competitive
advantages in markets of UK, as other competitive multinational companies will not
be able to expand their business in this country. Economic condition of this country
has also become unstable. It is stated that the prices of oil and gas has crashed
significantly so that British Petroleum will face problems to maintain their profitability.
Increased inflation rate will influence the pricing policy of IKEA so that prices of
products will rise.
These external changes will leave a negative impact on the business operation of
these two organisations. On the other hand, innovative business model of IKEA was
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beneficial for achieving competitive advantage in the market. British Petroleum has
earned respect in the market for supplying better products but this reputation has
been affected by the incident of oil spill. This controversy is the biggest weakness of
this organisation, which has affected its business strategies and business
operations.
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