Business Change Flashcards
Distinguish between Change and Business Change
Change is any alteration in the internal or external environments. These are differences that occurs naturally that the business does not actively implement.
such as change in customer tastes or a change in employee expectations.
Whereas
Business Change is the adoption of a new idea or behaviour by a Business. these are the the changes that the business actively implements in order to improve their efficiency and effectiveness in achieving business objectives
Def: Change
Change is any alteration in the internal or external business environments.
eg - due to technology advances over the last ten years there have been a 50% decrease in the postage of letters and a 50% increase postage of parcels due to online shopping.
Def: Business Change
Business Change is the adoption of any new idea or behaviour by a business.
eg- Australia Post had to adapt to the societal and technological change causing the increase in parcels and decrease in letters causing them to implement vehicles that allow the postmen to carry an increase in small packages.
Def: Proactive
Proactive is to initiate change rather than simply react to events.
eg-
Def: Reactive
Reactive is to wait for change to occur then to respond to it.
eg-
Skills in Managing Change- 6
Communication skills Planning Skills Leading Skills Decision-Making Skills Interpersonal Skills Delegating Skills
Def: Efficiency
Efficiency is the degree to which a business has achieved its business objectives
Def: Effectiveness
Effectiveness refers to how well a businesses uses resources to achieve business objectives
Def: Key Performance Indicators
Key Performance Indicators are a specific criteria used to measure the efficiency and effectiveness of a businesses performance.
KPI- Def: Percentage of Marketshare
Percentage of Marketshare refers to the businesses portion of the total industry sales for a particular good or service, expressed as a percentage
KPI- Def: Net Profit Figures
Net Profit is what remains when expenses are deducted from the revenue earned.
KPI- Def: Rate of Productivity
Rate of Productivity is a measure the change in output from one year compared to a previous year.
KPI- Def: Number of Sales
The Number of Sales of a product is a measure of goods or service sold.
KPI- Def: Rate of Staff Absenteeism
Rate of Staff Absenteeism measures the number of workers who neglect to turn up to work when scheduled to do so.
KPI- Def: Level of Staff Turnover
Staff Turnover measures the number of employees leaving the business.
KPI- Def: Level of Wastage
Level of Wastage measures the amount of rubbish created by the production process
KPI- Def: Number of Customer Complaints
Customer Complaints indicate whether or not the people who buy the products are satisfied with the performance of the business.
as a result of a customer satisfaction survey
KPI- Def: Number of Workplace accidents
The number of workplace accidents indicate how safe the work environment is for employees.
Def: Benchmarking
Benchmarking occurs when a business measures its performance against that of other businesses known for their excellence.
Def: Force Field Analysis
Force Field Analysis outlines the process of determining which forces drive and which resist a proposed change
Def: Driving Forces
Driving Forces are those factors which support the change
Def: Restraining Forces
Restraining Forces are those factors which work against change
Def: Internal Environment
Internal Environment refers to the factors inside the business.
Def: External Environment
The External Environment includes those things over which the business has little control over. It may be divided into an operating environment and a macro environment.
External Environment- Def: Operating Environment
Operating Environment refers to the outside factors with which the business directly interacts in the course of conducting its business.
External Environment- Def: Marco Environment
The Macro Environment is made up of the broad factors in the economy and society within which the business operates.
Internal Environment Driving Forces
- Managers
- Employees
- Pursuit of Profit
- Reduction of Costs
Operating Environment Driving Forces
- Competitors
- Customers
Marco Environment Driving Forces
- Legislation
- Globalisation
- Technology
- Innovation
- Societal Change
Def: Globalisation
Globalisation is the movement across nations of trade, investment, technology, finance and labour brought about by the removal of trade barriers.
Innovation- Def: Innovation and Niche Market
Innovation is a process that occurs when something already established is improved on
Niche Market is a narrowly selected market segment within a larger market.
Restraining Forces for business change
- Managers
- Employees
- Time
- Organisational Inertia
- Legislation
- Financial Considerations
Restraining Forces for business change- Def: Orgainsational Inertia
Organisational Inertia refers to an unenthusiastic response from management to proposed change.
Def: Competitive Advantage
A competitive advantage occurs then a firm, industry or economy has a lower cost price structure than its rivals for example goods and services are sold at a cheaper price and competitors are undercut
Force Field Analysis: What are the driving forces for change- Internal
- Managers:
- Employees:
- Pursuit of Profit
- Reduction of Costs
Force Field Analysis: What are the driving forces for change- External Macro and Operating
Operating:
- Legislation
- Globalisation
- Technology
- Innovation and Societal Change
Macro
- Competitors
Restraining forces of Change
- Managers
- Employees
- Time
- Organisational Inertia
- Legislation
- Financial Considerations
what are the 4 main financial cost of change?
- Purchasing new equipment
- Redundancy payments
- Retraining the workforce
- Reorganising plant layout.
What are porters 2 generic strategies
Lower Cost Strategies
Differentiation Strategies
what are the 5 Competitive Forces for Porter
Entry of New Competitors
Threat of Substitutes
The Bargaining Power of Buyers
The Bargaining Power of Suppliers
Rivalry among existing competitors
What are the Different Lower Cost Strategies
- Use Assets Efficiently
- Lower Costs of Operating
- Control the Supply Chain
Explain the Differentiation Strategy
Porters Generic Differentiation Strategy aims for a product to make their product unique in some way to gain a competitive advantage and allow the business to market itself as a leader or innovator in that industry.
Explain Porters theory
Porters theorised that in order to gain a competitive advantage it should first analyse the five competitive forces (The entry of new competitors, bargaining power of buyers, bargaining power of suppliers, rivalry among existing competitors and threat of substitutes) in order to determine the most appropriate generic strategy to use in order to gain a competitive edge.
What are the 6 skills used to manage change
- Delegation skills
- Communication skills
- Interpersonal skills
- leading skills
- decision making skills
- planning skills
What are the different KPIs used to analyse a performance of a business
- Percentage of marketshare
- Net Profit Figures
- Rate of Productivity growth
- Number of Sales
- Customer Complaints
- Rate of Absenteeism
- level of staff turnover
- level of wastage
- number of workplace accidents
What are the 5 steps of a Force Field Analysis
- Form a guiding group of people driving or enabling that change
- identify the change proposal using the force field analysis template.
- as a group, identify the forces that are currently driving or restraining the change and assign a score relative to the perceived strength of the force. the low strength forces should be assigned a 1 and the highest strength forces should be assigned a 5.
- Prioritise the top 3 to 5 most restraining and driving forces these are the forces the business and guiding group need to either eliminate or strengthen to allow the change to occur
- List the actions that are required to be completed to meet the proposed change and assign responsibility for each action
Pros of a Force Field Analysis
- Businesses are able to weigh the reasons why a business should implement change and why a business shouldn’t implement a change.
- it allows a business to identify and strengthen the forces supporting the change and identify and weaken the forces restraining the change.
- it allows the business to be more informed about the businesses strengths and weaknesses
Cons of a Force Field Analysis
- It may display inaccurate information about the driving and restraining forces due to a bias
- a business may neglect or may not be informed of certain driving and restraining forces and therefore may implement a inferior change or do not implement a superior change
- a force field analysis is time consuming and therefore will not be beneficial in an emergency.
what are the key principals of Lewin’s Force Field Analysis
- Driving Forces and restraining forces
- The force Field analysis should be carried out through using 5 steps.
firstly, form a guiding groups supporting or enabling change.
secondly, the business should identify a proposed change using the Force Field Analysis template.
thirdly, the forces should be numbered based on order of strength, such as a extremely weak force should be given a number 1 whereas a extremely strong force should be given a number 5.
fourthly, the most 3 to 5 restraining and driving forces should be prioritised and then should either be eliminated or strengthened to allow the change to occur. this can occur through an action plan such as a timeline eg 6 months.
finally, the actions that are required to be completed to meet the proposed change and assign a responsibility for each action. - If the restraining forces outweigh the driving forces the change shouldn’t be implemented whereas if the driving forces outweigh the restraining forces the change should be implemented.
Communicating Skills
Communicating effective transfer of information from a sender to a receiver and to listen to feedback.
Delegating Skills
Delegating is ability to transfer responsibility from a manager to an employee to carry out specific activities
Leading Skills
Leading is the ability to influence or motivate people to work towards the achievement of a specific business objective.
Planning Skills
Planning is the ability to define business objectives and determine a method or strategy to achieve them.
Decision Making skills
Decision making is the ability to identify the options available and choose a course of actions from the alternatives.
Interpersonal Skills
Interpersonal Skills refer to the ability to deal or liaise with people and build positive relationships with staff