3.  External changes are those changes which organisations have no control over.  Changes might be caused by: › Financial reasons › Research › Competition › Other reasons

4.  Examples could include: › Changes in tax rates, such as VAT or income tax. › Changes in interest rates which affect loan repayments etc. › Changes in minimum wage. › Changes in exchange rates.

5.  Examples could include: › Changes in production techniques. › Changes in the materials that are used for production. › Different trends may become apparent which means an organisation needs to adjust. › Developments in ICT

6.  Examples could include: › Changes in production techniques that make competitors more efficient which in turns allows them to lower their prices and produce more. › New products on the market. › Special offers from competitors. › Price of shares for other companies.

7.  Examples could include: › New Governments coming into power and changing policies and funding. › Updates to laws and legislation. › Environmental changes. › Pressure groups, such as Green Peace, can disrupt the running of an organisation. › Transport link changes, including new trains, buses and new roads.

8.  When external changes occur, an organisation must respond in order to adapt to the change successfully.  Responding too late can have negative outcomes for organisations, which might have further repercussions for other organisations!  Examples of this include the film and music industry possibly reacting too slowly to the way people accessed media content on the internet.

9.  Worst case scenario, the impact on an organisation is that it goes out of business.  Changes in things like income tax can have a massive impact on organisations because it is effectively a charge on earnings and profits.  A slightly worst case scenario could involve redundancies and restructuring within the organisation.

10.  Its not all doom and gloom though…  Changes in the financial market could result in the cost of borrowing going down.  This could mean that companies are willing to spend more on R&D and come up with new product lines (such as 3D televisions!).  This in turn might result in a growth in employment and, again, some restructuring!

11.  If a company goes under or is facing financial difficulties then a person may end up losing their job.  If a company is doing well then a person may find themselves in a position to get a better job within the organisation (promotions).  All these things may result in a person needing to be retrained, work different hours (part-time or full- time) or work in a different area of an organisation.

12.  Some individuals might also get ‘head-hunted’ by external organisations if they believe they would be a valuable asset to their company.  This, of course, has an impact on the organisation that loses their staff member.

13.  Other external factors might include: › Births › Deaths › Marriages  All these things could result in an individual having to change they way they work. › Part-time or full-time › Flexitime › Working from home

14.  New production methods can influence change.  Change on a system can result from any external change, such as changes in finances or in competition from other organisations.  Systems sometimes need to be changed to deal with these situations, and, in most cases, result in a more streamlined system.

15.  The change to a system could be in the form of: › A system which has increased efficiency but requires the same number of operators. › A larger system to cope with extra requirements. › A smaller system which requires less operators.

16.  Read through the example scenarios on pages 201-203.  Complete the activities on page 203.  Answer the questions on page 203.

17.  Explain the impact of new competition on an organisation. [6 marks]  Describe the impact that a downturn in the economy can have on individuals within an organisation. [4 marks]