Driving and restraining forces for change (VCE Business Management Unit 4)

What this dot point is asking

VCAA wants you to identify the specific driving forces that push a business to change and the restraining forces that resist it, to distinguish internal forces (inside the business) from external forces (in its operating and macro environment), and to explain proactive versus reactive approaches to change. This dot point supplies the content that Lewin's force field analysis organises (see the related dot point) - the named forces themselves. Section A questions commonly test the identification of forces; Section B case studies require you to identify the forces acting on the scenario business.

The answer

Driving forces for change

Driving forces push a business towards change. The study design groups them, and it helps to sort them into internal and external sources.

Internal driving forces (inside the business)

• Owners. Owners and shareholders push for change to lift returns, grow the business or pursue a vision.
• Managers. Managers initiate change to improve performance, respond to KPIs or implement strategy.
• Employees. Employees can drive change through ideas, feedback and expectations about how they want to work.
• Pursuit of profit. The drive to lift profit motivates changes to pricing, products and cost structure.
• Reduction of costs. Pressure to cut costs drives automation, restructure and supply-chain change.

External driving forces (in the operating and macro environment)

• Customers. Changing customer needs and expectations (value, convenience, ethics) force product and service change.
• Competitors. A rival's price cut, new product or market entry forces a response.
• Suppliers. Supplier changes (price rises, shortages, new capabilities) push operational change.
• Technology. New technology makes old processes obsolete and creates pressure to adopt.
• Globalisation. Global competition, global sourcing and global markets drive structural change.
• Innovation. New business models and products in the market force incumbents to keep pace.
• Legislation. New laws (workplace, environmental, consumer, tax) compel change to stay compliant.
• Societal attitudes. Shifts in social values (sustainability, ethics, diversity) drive changes to operations, sourcing and culture.

Restraining forces for change

Restraining forces resist or slow change. Many sit inside the business.

• Managers. Managers can resist change that threatens their authority, comfort or established way of working.
• Employees. The most common restraining force - staff fear job loss, skill obsolescence, loss of status, or simply the disruption of new routines.
• Time. Change takes time the business may not have, and rushing it raises risk.
• Organisational inertia. Entrenched culture, habits and systems resist change ("we have always done it this way").
• Financial considerations. The capital cost of change (technology, redundancy, retraining) restrains it.
• Legislation. Laws can also restrain change - they constrain the options available (for example, consultation and redundancy obligations under the Fair Work Act 2009).

Notice that some sources (managers, employees, legislation) can be both driving and restraining depending on the situation. Employees who want better tools drive change; employees who fear automation restrain it.

Internal versus external forces

A useful exam discipline is to classify each force.

Internal forces are within the business's control; external forces must be monitored and responded to.

Proactive versus reactive approaches

How a business responds to these forces defines its approach.

Proactive approach. The business anticipates change and acts ahead of the pressure - scanning trends, reading competitor moves and changing before it is forced to. Lower long-run risk and more control, but it requires foresight and the willingness to invest before the need is obvious.

Reactive approach. The business responds to change only after the pressure has hit - a competitor has already taken share, a law has already changed, profit has already fallen. Often more disruptive and costly because the business is on the back foot.

A learning organisation (see Senge in the related dot point) leans proactive - it builds the adaptive capacity to anticipate and lead change rather than only respond.

Examples in context

Example 1. Competitor and customer forces in supermarkets. Aldi's expansion in Australia was a powerful external driving force - a competitor whose low-price model pulled customers and forced Coles and Woolworths to change pricing, expand private-label ranges and rethink store formats. The 2022-2024 cost-of-living pressure (a customer and societal-attitude force) intensified the change. The incumbents' responses mixed proactive moves (private-label investment) and reactive ones (price-matching campaigns).

Example 2. Legislation as both a driving and a restraining force. The Closing Loopholes Acts (2023-2024) drove change in how large employers manage casuals and labour hire - a legislative driving force compelling new compliance. At the same time, the Fair Work Act's consultation and redundancy obligations act as a restraining force on rapid restructure, constraining how fast a business can change its workforce. The same legal environment both drives and restrains.

Try this

Q1. Identify two internal and two external driving forces for change. [2 marks]

• Cue. Internal: owners, managers, employees, pursuit of profit, cost reduction. External: customers, competitors, suppliers, technology, globalisation, innovation, legislation, societal attitudes.

Q2. Explain how employees can be both a driving and a restraining force for change. [2 marks]

• Cue. Driving when they push for better tools, processes or ways of working; restraining when they fear job loss, skill obsolescence or disruption and resist the change.

Q3. Distinguish between a proactive and a reactive approach to change, and assess which is generally lower risk. [4 marks]

• Cue. Proactive anticipates and acts ahead of the pressure (more control, lower long-run risk, needs foresight and upfront investment); reactive responds only once forced (more disruptive and costly). Proactive is generally lower risk where the business has the foresight and capacity to invest early.