4 Flashcards
business change and KPIS
business change
key performance indicators
percentage of market share
net profit figures
number of sales
number of customer complaints
business change
is the alteration of behaviours, policies and practices of a business.
key performance indicators
are criteria that measure how efficient and effective
a business is at achieving different objectives.
percentage of market share
measures a business’s proportion of total sales in a specific industry, expressed as a percentage.
percentage of market share = a business’s total sales / total sales in the business’s industry x 100
net profit figures
are calculated by deducting total expenses incurred from total revenues
earned over a period of time.
number of sales
is the amount of goods and services sold by a business within a
specific time period.
number of customer complaints
is the amount of customers who have notified
the business of their dissatisfaction.
HR and operations KPIS
rates of staff absenteeism
level of staff turnover
number of workplace accidents
level of wastage
rate of productivity growth
rates of staff absenteeism
is the average number of days employees are not present when
scheduled to be at work, for a specific period of time.
rates of staff absenteeism = total number of days all staff are absent for a period of time / total number of staff
level of staff turnover
is the percentage of employees that leave a business in a year and
have to be replaced.
level of staff turnover = total number of staff leaving in a year / total number of staff required x 100
number of workplace accidents
measures the amount of injuries and unsafe incidents that occur at a work location over a period of time.Workplace accidents can occur due to:
• old or faulty equipment
• poorly trained employees
• dangerous nature of work tasks
• unsafe working practices
level of wastage
is the amount of inputs and outputs that are discarded
during the production process.
rate of productivity growth
is the increase in outputs produced from a given
level of inputs over time. rate of productivity growth = new productivity rate - old productivity rate / old productivity rate x 100
force field analysis
theory is a model that determines if businesses should proceed with a proposed change. This model identifies and examines factors which promote or hinder the change from being successful.
force field analysis forces
driving forces
restraining forces
driving forces
are factors within or outside the business’s environment which promote change.
restraining forces
are factors within or outside the business’s environment which resist change.
force field analysis steps
Step 1: Identify need for change
Step 2: Identify driving forces
Step 3: Identify restraining forces
Step 4: Assign scores
Step 5: Analyse and apply
internal driving forces
driving forces
managers as driving forces
employees as a driving force
pursuit of profit as a driving force
reduction of costs as a driving force
driving forces
are the factors within or outside the business environment which promote change.
managers as a driving force
Managers will act as an internal driving force as they are incentivised to push for change that will help the business better fulfil its objectives. At any level of management, the achievement of objectives will reflect positive performance. This can improve a manager’s job security or create financial benefits.
employees as a driving force
In return for their contribution to the business, employees have their own expectations. These include competitive wages, supportive working conditions, and training. As such, any proposed change that can improve the working conditions of employees will see them become a driving force.
pursuit of profit as a driving force
opportunities to improve financial performance will often encourage a business to change. Additionally, this will make a business better able to fulfil its obligations, such as providing a return to shareholders.
reduction of costs as a driving force
Strategies that reduce wastage or improve productivity can reduce a business’s costs and improve its profitability as often this will lead to an increase in a business’s net profit margin.
external driving forces
competitors as a driving force
technology as a driving force
societal attitudes as a driving force
legislation as a driving force
innovation as a driving force
globalisation as a driving force
competitors as a driving force
Competitors changing prices, using new technology or running advertising campaigns can affect the performance of other businesses in the market. This makes competitors a driving force for change as a business must always adapt to remain competitive.
technology as a driving force
Technology will always drive businesses to change.
societal attitudes as a driving force
Society is more aware of how businesses are operating because of the internet. As a result, businesses need to align their operations with societal attitudes and behaviours.
legislation as a driving force
If current operations breach the new legislation, a business will have no choice but to change the way they operate. Businesses will always need to comply with legislation, making it a constant driving force for change.
innovation as a driving force
Many businesses will continuously innovate their products or procedures in order to maintain sales and market share.
globalisation as a driving force
The trend of globalisation means that more businesses are operating on a global scale due to trade barriers being removed. Businesses are now operating in a single global market, which means that all businesses face the pressure of international competition.
restraining forces
restraining forces
managers as a restraining force
employees as a restraining force
legislation as a restraining force
time as a restraining force
financial consideration as a restraining force
organisational inertia as a restraining force
restraining force
are internal and external factors that resist a business change or
actively try to stop it.
managers as a restraining force
Although managers are often a driving force, they can also be a restraining force for business change. Managers may be unwilling to introduce a business change if they do not support the change or it threatens their position.
employees as a restraining force
Employees may resist a business change if the outcome is uncertain, it affects their job security or they fail to see a reason for the change. Employees may even actively oppose these changes by carrying out industrial action
legislation as a restraining force
As
a restraining force, businesses need to comply with laws and regulations to avoid fines, suspensions or even closure. Therefore, a business must consider the types of legislation that apply to any proposed business change
time as a restraining force
The time restrictions may be due to other restraining forces such as legislation deadlines or financial pressures. If time has been identified as a restraining force, a business may have to find ways to alter the time restriction. This can mean the change is progressively implemented in stages or another business is engaged to assist with implementing the change.
financial considerations as a restraining force
A business must ensure that it has enough funds to carry out the proposed change. If the business cannot finance the change, it will need to explore different ways of obtaining the required funds. In some cases, it may even have to alter the proposed change due to financial restrictions.
organisational inertia as a restraining force
When a business matures and grows in size, processes and procedures often have to be made consistent to promote efficiency in operations.
porter’s generic strategies
lower cost strategy
differentiation strategy
porters lower cost strategy
is a business offering customers similar or lower-priced products compared to the industry average while remaining profitable by achieving the lowest cost of operations among competitors.
pricing approach
charge similar prices to competitors
charge slightly lower prices than competitors
charge much lower prices than competitors
a business can achieve the lowest cost of operation by:
1 Reducing internal operating costs
• producing basic, no-frills products or services.
• reducing expenditure on marketing and advertising.
2 Reducing the cost of supplies
• obtaining discounts by purchasing supplies in bulk.
• securing cheaper supplies from global sourcing of inputs.
Differentiation strategy
offers customers unique services or product features that are
of perceived value to customers which can then be sold at a higher price than competitors.
A business can create a point of differentiation for their product or service by:
• introducing new technology such as electric cars or wireless charging for smartphones.
• implementing innovations such as new flavours for chocolates or soft drinks.
