chapter 4 Flashcards
Business change
is the alteration of behaviours, policies and practices of a business.
Key performance indicators (KPIs)
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.
Woolworths share price is around 10% lower now (June) than it was at the start of 2022
Net profit figures
are calculated by deducting total expenses incurred from total revenues earned over a period of time.
Net profit figure = Total revenue – Total expenses
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.
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.
Level of staff turnover
is the percentage of employees that leave a business in a year and have to be replaced
Number of workplace accidents
measures the amount of injuries and unsafe incidents that occur at a work location over a period of time.
Level of wastage
is the amount of inputs and outputs that are discarded during the production process
reduce wastage from plastic bags
Rate of productivity growth
is the increase in outputs produced from a given level of inputs over time.
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.
Lewin’s force field analysis theory helps businesses identify factors which influence change. The model has two key principles: driving forces and restraining forces.
Lewin’s force field analysis process
- Identify the need for change
- Identify driving forces
- Identify restraining forces
- Assign scores to forces
- Analyse situation and apply
Advantages and disadvantages - Force field analysis
ADVANTAGES
• Businesses can examine if a proposed the change will be successful.
• Businesses can potentially save time by promoting the main driving forces and limiting the main restraining forces.
• Businesses can potentially save money by only implementing change where success is likely.
DISADVANTAGES
• Employees may be unhappy if driving forces exceed restraining forces and change still occurs.
• Can be time-consuming, especially if a business must go ahead with a change
Driving forces
are the factors within or outside the business environment which
promote change.
Managers as a driving force
The primary focus of a manager is to ensure that the business is achieving its objectives.
Employees as a driving force
Employees help achieve business objectives by completing work tasks to meet the needs of the business. 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. A business may be able to source materials from a cheaper supplier or move their locations to benefit from cheaper rent as a means of reducing costs and improving profits
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
Using technology, businesses can increase the efficiency of their operations and improve overall productivity. If a business fails to adopt suitable technology, it may impact their ability to compete and survive. Some forms of technology include automated production lines, computer-aided design, computer-aided manufacturing and website development. As technology is constantly progressing, it will always act as a driving force for 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. The rise of online shopping has required many businesses to develop an online presence. Additionally, the increasing trend of individuals becoming health conscious has driven many businesses to create new healthy product ranges. Increased societal concerns about being eco-friendly have also caused businesses to reduce their impact on the environment. Constantly evolving, societal attitudes will always be a driving force for business change.
Legislation as a driving force
All businesses are required to comply with laws and regulations to avoid fines, suspensions or even closure. A business may be forced to change if new legislation is introduced. 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
With constant pressure from competitors, businesses are always improving existing products and services or introducing new ones. Many businesses will continuously innovate their products or procedures in order to maintain sales and market share. Since
businesses are always looking for ways to improve their products, innovation will always be a driving force.