Business Strategy and Change - TCE Business Studies (Tasmania)
“Evaluate strategic planning tools and approaches to managing organisational change.”
Strategy is the long-term plan a business uses to achieve its objectives and gain a competitive advantage, and change management is the structured approach managers use to move the business from its current state to a new one while minimising disruption and resistance.
What this dot point is asking
Strategic management is about setting a business's long-term direction. It usually starts with a vision (where the business wants to be in the future) and a mission (its purpose and reason for existing), which guide its objectives. Objectives are often described as SMART (Specific, Measurable, Achievable, Relevant and Time-bound) so progress can be judged. Planning happens at three levels: strategic planning (long term, set by senior management, covering the whole business), tactical planning (medium term, turning strategy into departmental plans), and operational planning (short term, day-to-day actions).
To form a strategy, managers analyse both the business and its environment. A SWOT analysis examines internal Strengths and Weaknesses and external Opportunities and Threats. Strengths and weaknesses are internal and controllable; opportunities and threats come from the external environment. The goal is to use strengths to seize opportunities while addressing weaknesses and defending against threats.
A competitive advantage is a feature that lets a business outperform rivals and is hard to copy, such as lower costs, a stronger brand, better service or unique technology. Strategy exists to build and protect this advantage.
A widely used framework is Porter's generic strategies. A cost leadership strategy aims to be the lowest-cost producer so the business can compete on price. A differentiation strategy makes the product distinctive (through quality, design, service or brand) so customers will pay more. A focus strategy targets a narrow market segment with either low cost or differentiation. Choosing one clear strategy avoids being "stuck in the middle", where a business is neither the cheapest nor the most distinctive.
Internal factors (strengths and weaknesses) are things the business controls, such as staff skills or finances. External factors (opportunities and threats) come from the wider environment, such as new technology or a new competitor. Mixing these up is a common analytical error.
Strategy must respond to change, because the business environment never stands still. Drivers of change include new technology, shifting customer tastes, competitors, economic conditions, globalisation and new laws. Change can be reactive (responding after an event) or proactive (anticipating and acting before it forces a response); proactive change is usually less disruptive.
Managing change well matters because change often meets resistance. People resist for reasons such as fear of the unknown, loss of job security, lack of skills for the new way, or poor communication. A useful model is Lewin's three-step approach: unfreeze (build awareness of why change is needed and challenge old habits), change (introduce the new processes with training and support), and refreeze (embed the change so it becomes the new normal). Driving forces push change forward while restraining forces hold it back, and managers succeed by strengthening drivers and weakening restraints.
A firm introduces new accounting software but staff resist because they fear they cannot use it. The manager unfreezes by explaining the time savings and involving staff in planning, changes by providing hands-on training and support, then refreezes by recognising early adopters and retiring the old system. Communication and training reduce the restraining forces of fear and lack of skill.
Effective change management relies on clear communication, staff involvement, training and strong leadership, often supported by incentives and a realistic timeline. Strategy and change are linked: a good strategy sets the destination, and change management is how the business actually gets there.
Strategy is not something a business writes once and files away. The environment keeps changing, so strategy must be reviewed and adjusted continually. A plan that ignores new competitors, technology or customer needs quickly becomes outdated, which is why monitoring and managing change are part of strategic management, not separate from it.
Exam-style questions
Questions in the style of TASC exam questions on this dot point, each with a worked answer. They are written by ExamExplained unless tagged "Past paper"; the year shows the paper a question is modelled on.
Practice6 marksExplain Porter's three generic strategies and the danger of being 'stuck in the middle'.Show worked answer →
A 6 mark response needs the three strategies explained and the stuck-in-the-middle problem made clear, about 2 marks each.
- Cost leadership (about 2 marks)
- Aim to be the lowest-cost producer so the business can compete on price and still earn a margin, for example through scale and efficient operations.
- Differentiation (about 2 marks)
- Make the product distinctive through quality, design, service or brand so customers will pay more, building a competitive advantage that is hard to copy.
- Focus (about 1 mark)
- Target a narrow market segment with either low cost or differentiation, serving that segment better than broad rivals.
- Stuck in the middle (about 1 mark)
- A business that pursues no clear strategy is neither the cheapest nor the most distinctive, so it loses price-sensitive customers to cost leaders and quality-seeking customers to differentiators.
Markers reward each strategy explained and a clear account of why a lack of a single clear strategy weakens competitiveness.
Practice8 marksUsing Lewin's model, explain how a manager could lead a major change while overcoming resistance, and evaluate the importance of communication in the process.Show worked answer →
An 8 mark response needs Lewin's three steps applied to a change and a judged account of communication.
- Apply Lewin's model (about 4 marks)
- Unfreeze: build awareness of why change is needed and challenge old habits, for example by sharing data on falling sales. Change: introduce the new processes with training and support, involving staff so they feel ownership. Refreeze: embed the change through recognition, updated procedures and retiring the old way so it becomes the new normal.
- Address resistance (about 2 marks)
- Identify why people resist (fear of the unknown, loss of security, lack of skills, poor communication) and show how involvement, training and incentives weaken these restraining forces while strengthening driving forces.
- Evaluate communication (about 2 marks)
- Argue that communication is central at every step: it creates the case for change, reduces fear by explaining the benefits, and sustains the new behaviour. Conclude that change managed without clear, two-way communication usually fails because resistance is not addressed.
Markers reward Lewin's steps applied to a real change and a reasoned judgement of why communication is decisive.