Causes and effects of change — Edexcel A-Level Business
Test yourself on Causes and effects of change with PEARSON EDEXCEL A-Level practice questions.
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Causes and effects of change explained
Something either pushes the business from inside or pulls it from outside, and the reward in the exam is for saying which, because the response differs.
Read the full explanation
Internal triggers include growth, which Greiner models as phases each ending in a crisis of leadership, autonomy, control or red tape; weak results such as a falling operating margin or return on capital employed; a takeover or family handover that installs owners with a different time horizon; and a leader who rewrites the vision rather than administering the one already there. External triggers are read through the political, economic, social, technological, legal and environmental headings, a checklist that lists influences but never weights them or says how fast each one bites, so the evaluation is about which pressure is urgent for this firm now.
b) Possible effects on: competitiveness; productivity; financial performance; stakeholders
The marks here are for tracing a consequence, not naming one: a cost cutting programme raises output per worker only if the staff who remain are trained, and it lowers unit costs only if volume holds up. A firm competes better where the change either cuts cost per unit or sharpens what makes it different, which is Porter's generic strategies point, and worse where it ends up doing both half well. Output per employee almost always dips first, because people learn a new system before they get quick at it. The money shows up in operating margin, in return on capital employed and in cash flow, and restructuring costs usually land this year while the savings arrive later. Groups affected gain and lose unevenly, and Mendelow's grid ranks them by power and interest so the answer does not simply list them.
Your focus
- a) Causes of change: changes in organisational size; poor business performance; new ownership; transformational leadership; the market and other external factors (PESTLE)
- b) Possible effects on: competitiveness; productivity; financial performance; stakeholders
Causes and effects of change exam tips
Marking Points
- Classifying the trigger as internal or external and saying why that matters, since an internal one is within management control while a rise in interest rates or a new regulation is not.
- Naming Greiner and using a phase, for example that a firm of thirty staff has outgrown its founder and faces a crisis of leadership, so the answer is structural rather than strategic.
- Using the extract's evidence of weak performance in figures, such as a fall in operating profit margin or in return on capital employed = (operating profit / capital employed) x 100, rather than asserting that the business is struggling.
- Working the external headings selectively, choosing the two that actually move this market instead of parading all six.
- Building a chain of reasoning with connectives, so that a shorter chain of command means faster decisions, which means quicker response to a rival's price cut.
- Quantifying the direction and size of the effect, using labour productivity = output per period / number of employees or return on capital employed = (operating profit / capital employed) x 100.
- Separating the short run from the long run, since disruption costs come first and the efficiency gain, if it arrives, arrives later.
- Ranking the groups affected rather than listing them, and naming a conflict, such as shareholders gaining from a closure that costs a town its employer.
Examiner Tips
- 💡The trigger is usually the shorter opening question, with the consequences carrying the long assess or evaluate question in the same set, so keep the heavyweight argument for that one.
- 💡Anchor every cause you name in a line of the extract or a figure in the data, because application is marked before analysis.
- 💡If the case gives both an internal and an external pressure, say which came first, since that often explains why management acted when it did.
- 💡This is twenty mark territory, and consequences split cleanly into short run and long run, so a judgement that says when the benefit arrives beats one that says only whether it arrives.
- 💡Build in the counter case: a change with improving figures and a demoralised workforce is exactly where the evaluation marks are hiding.
- 💡Quote one number from the extract and one qualitative line, because the strongest answers use both kinds of evidence on the same point.
Common Mistakes
- Listing every political, economic, social, technological, legal and environmental factor with no link to the business, which earns knowledge credit only and stalls at the bottom of the level.
- Treating a takeover as automatically meaning upheaval, when an owner buying a business for its cash flow may change almost nothing about how it operates.
- Describing transformational leadership as simply being a strong or popular leader, when the point is a leader who changes the vision, culture and expectations of staff.
- Asserting that a business becomes more competitive without naming the route, which has to be lower cost or stronger differentiation.
- Confusing production with productivity, so an answer says output rose and therefore workers became more productive while ignoring that headcount rose too.
- Treating every stakeholder as equally affected and equally powerful, which produces a list where a judgement is wanted.