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Business Management > AOS 4 - The need for change > Flashcards

AOS 4 - The need for change Flashcards

1
Q

Business change

A

Is the alteration of behaviors, policies & practices of a business

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2
Q

key performance indicators

A

are criteria that measure how efficient & effective a business is at achieving different objectives

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3
Q

percentage of market share

A

measures a business’s proportion of total sales in a specific industry expressed as a percentage

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4
Q

net profit figures

A

calculated by deducting total expenses incurred from total revenues earned over a period of time

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5
Q

number of sales

A

the number of goods & services sold by a business within a specific time period

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6
Q

number of customer complaints

A

the number of customers who have notified the business of their dissatisfaction

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7
Q

rates of staff absenteeism

A

the average number of days employees aren’t present when scheduled to be at work for a specific period of time

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8
Q

level of staff turnover

A

the percentage of employees that leave a business in a year & have to be replaced

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9
Q

number of workplace accidents

A

measures the number of injuries & unsafe incidents that occur at a work location over a period of time

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10
Q

level of wastage

A

the number of inputs & outputs that are discarded during the production process

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11
Q

rate of productivity growth

A

the increase in outputs produced from a given level of inputs over time

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12
Q

force field analysis theory

A

is a model that determines if businesses should proceed with a proposed change. This model identifies & examines factors that promote or hinder the change from being successful

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13
Q

driving forces

A

are forces outside the business’s environment that promote change

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14
Q

restraining forces

A

are factors within or outside the business’s environment which resist change

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15
Q

STEP 1 - identify the need for change

A

Businesses face internal or external pressures to change what must be altered to fulfill business objectives and reduce these pressures

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16
Q

STEP 2 - identify driving forces

A

which internal & external factors promote the proposed change

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17
Q

STEP 3 - identify restraining forces

A

which factors resist the proposed change

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18
Q

STEP 4 - assign scores

A

determine the strength of each driving & restraining force by assigning numerical scores that are based on their level of influence on the proposed change

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19
Q

STEP 5 - analyze & apply

A

add up scores of driving forces & compare it to total of restraining forces.

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20
Q

force field analysis - A & D

A

A

  • business can examine if the proposed change will be successful
  • Businesses can potentially save time by promoting the main driving forces & limiting the main restraining forces
  • Businesses can potentially save money by only implementing change where success is likely

D

  • emps may be unhappy if driving forces exceed restraining forces & change still occurs
  • can be time-consuming especially if a business must go ahead with a change.
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21
Q

internal driving forces

A

are the forces that the business has control over & are relevant to the internal environment

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22
Q

external driving forces

A

are factors that exist outside of the business that must be responded to in order to remain competitive

23
Q

managers as a driving force

A
  • vested interest because business performance impacts their financial & job security
  • managers will act as an internal driving force as they’re incentivized to push for change that’ll help the business to achieve its objectives
  • the achievement of objectives will reflect a positive performance improving a mangers job security to financial benefits
24
Q

employees as a driving force

A
  • in return for their contribution employees have expectations of competitive wages, supportive working conditions
  • as such, any proposed change that can improve the working conditions of employees will see them become a driving force
25
Q

pursuit of profit as a driving force

A
  • opportunities to improve financial performance will often encourage a business to change
  • additionally, that’ll make a business better able to fulfill its obligations such as providing a return to shareholders
26
Q

reduction costs as a driving force

A
  • strategies that reduce wastage or improve productivity can reduce a business’s costs & improve its profitability as often this’ll lead to an increase in a business’s net profit margin
  • a business may be able to source materials from a cheaper supplier to move their locations to benefit from cheaper rent as a means of reducing costs & improving profits
27
Q

competitors as a driving force

A
  • if a business fails to compete within its respective market, it’ll struggle to survive
  • competitors changing prices using new tech 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 try to remain competitive
28
Q

tech as a driving force

A
  • if a business fails to adopt suitable tech may impact its ability to compete & survive
  • as tech is constantly progressing always acts as a driving force for change
29
Q

societal attitudes as driving forces

A
  • society is more aware of how businesses are operating because of the internet as a result companies need to align operations with societal attitudes & changes
  • the rise of online shopping forced businesses to develop an online presence
  • an increasing trend of individuals becoming health conscious has driven many businesses to create new healthy product ranges
30
Q

legislation as a driving force

A
  • if current operations breach new legislation businesses 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
31
Q

innovation as a driving force

A
  • with constant competitor pressure businesses are always improving existing products & services or introducing new ones
  • many businesses will continuously innovate their products or procedures in order to maintain sales & market share
32
Q

globalisation as a driving force

A
  • businesses are now operating in a single global market meaning all businesses face the pressure of international competition
  • increased international competition means that businesses need to find more efficient ways to operate
  • if a business fails to recognise that they’re competing in a global market it’ll likely not survive
33
Q

restraining forces

A

are internal & external factors that resist a business change or actively try & stop it

34
Q

managers as a restraining force

A

managers may be unwilling to introduce a business change f they don’t support the change or it threatens their position

35
Q

employees as a restraining force

A
  • 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
  • to overcome employees as a restraining force managers often have to persuade or create incentives for the proposed change to be adopted
36
Q

legislation as a restraining force

A
  • a business must consider the types of legislation that apply to any proposed business change
  • to overcome a legislative restraining force a business may have to apply for licenses obtain permits or even change contracts & agreements
37
Q

time as a restraining force

A
  • 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 restrcition

38
Q

financial considerations as a restraining force

A
  • a business must ensure that it has enough funds to carry out the proposed change
  • if the business cannot finance the change it’ll need to explore different ways of obtaining the required funds
39
Q

organizational interia

A

the tendency for a business to maintain established ways of operating

40
Q

organizational interia as a restraining force

A
  • when a business matures & grows in size processes & procedures often have to be made consistent to promote efficiency in operations
  • as staff become familiar & comfortable with these structures attempts to make changes can be difficult
41
Q

porter’s lower-cost strategy

A

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

42
Q

charge similar prices to competitors -

A

experiences higher profit margins than competitors because the business has the lowest cost of operations

43
Q

charge slightly lower prices than competitors -

A

maintains a higher profit margin than competitors by keeping the price decrease smaller than the business’s cost advantage

44
Q

charge much lower prices than competitors

A

thin profit margins are outweighed by a high volume of customer sales gained from significantly lower prices

45
Q

a business can achieve the lowest cost of operations by

A
  • reducing internal operating costs

- reducing costs of supplies

46
Q

porter’s lower-cost strategy - A

A

A

  • attractive to cost-conscious customers
  • business operations optimized & must remain efficient & effective to maintain lower costs of operations
  • reduce expenses of operations
47
Q

porters differentiation strategy

A

offers customers unique services or product features that are perceived value to customers which can then be sold at a higher price than competitors

48
Q

a business can create a point of differentiation for their product or service by

A
  • implementing innovations
  • introducing new tech
  • niche marketing
49
Q

porters differentiation strategy - A

A

A

  • customers are often loyal to brand because unique
  • employees may feel increased sense of pride
  • quicker sales from loyal customers
  • can charge premium process for products or services as a customer cannot purchase elsewhere
50
Q

porters differentiation strategy - D

A

D

  • can be difficult to prevent competitors from replicating
  • new employees may require additional training to adapt
  • higher investments of the money such as research to develop innovative products
  • higher selling prices can deter some customers
51
Q

porter’s lower-cost strategy - D

A

D

  • customers aren’t brand loyal, and competitors offer cheaper alternatives
  • fewer employees required as work tasks may be merged, employees may feel stressed
  • thin profit margins & reliance on low operating costs can leave a business vulnerable to unforeseen increases in expenses
52
Q

Lower costs vs differentiation

A

LC

  • sells at similar of lower price
  • target s costs conscious customers

SAME
- increases business’s profitability by providing competitive advantage

D

  • sells at premium prices
  • targets customers that aren’s price sensitive
53
Q

contemporary case study - Costco

porter’s generic strategy

A

most of the revenue through sail operates with a thin profit margin of around 2%, still, able o generate significant profit.
reducing operating costs
- purchasing stock directly from manufacturers
- $0 advertising budget
- purchasing large amounts of stock
lower prices than competitors significantly lower than industry average

Business Management (5 decks)

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