SAC 4/1 - the need for change Flashcards
The concept of business change
The adoption of a new idea or behaviour resulting in a difference in the form or operation of a business over time. Change happens because businesses have pressures that they need to adapt to, pressures can come from inside or outside the business.
example of business change
Twitter: according to the new York times, twitter currently has under 2000 employees, this is down from 7500 before Elon musk purchase.
reactive change
where the business is impacted by pressures from the business environments and then responds as a result.
types of reactive change
- crisis management
- being flexible
- reacting to competitors
crisis management
Being faced with a crisis and implementing strategies to overcome the issues the business is faced with
being flexible
leaders must be ready to shift strategies, relocate resources, or modify products or services in response to changes
reacting to competitors
a competitor may implement a strategy that impacts the business and the leaders need to implement change in response
example of reactive change
- ingredients are costing the business more as well as increased cost of living pressures reducing sales
- earnings are expected to drop by approx. 20%
- as a result, dominos are closing approx. 100 stores, postponed, expansion into Denmark and released new affordable products and such as my domino box
- changes are expected to save dom 53 million-59
proactive change
initiating change rather than simply reacting to events.
- allows business to be more in control rather than reacting all of the time.
- using KPI’s to identify problems before they occur, than ensuring that appropriate policies are put in place as follow-up.
types of proactive grades
- conducting regular market research
- encouraging innovation
- strategic planning
- identifying potential issues early
conducting regular market research
by staying informed about trends and changes in the market
encouraging innovation
encourage employees to come up with new ideas can lead to improvements in products, services or processes
strategic planning
businesses should have long -term strategic plans that consider potential future chnages
identifying potential issues early
monitoring KPI’s and implementing changes before there is a larger concern
example of proactive change
microsoft, invested 11 billion to open AI, which included an initial investment 1 billion in 2019, to a further 10 billion investment 2023
- this helped microsoft build best in class platforms and provide services that drive productivity and competitors
- the partnership with open AI has potential opportunities to take search market share away from its dominent competitor, google
- opportunity to integrate open AI technology into tools and applications for microsoft major customers, potentially driving strong growth
internal forces
(we have control)
Strengths - something that we can do very well today that could help
be a gain with skills, resources and knowledge already in place.
Weaknesses - areas that are holding us back that should be removed
or improved upon with the right energy and effort
external forces
we do not have control)
Opportunities - positive potential areas to invest in or pursue, like
technology, relaxing regulations, elimination of trade barriers or
changing consumer preferences
Threats - negative factors such as the emergence of new regulations, increased
trade barriers or supply chain disruption.
SWOT analysis
Gathering information to determine the strengths, weaknesses, opportunities and threats of each strategy in order to decide whether it should be implemented and how effective it will be.
buyer power
the fewer buyers (businesses) in a market, the more power they have over suppliers to negotiate lower prices and/or better quality inputs
supplier power
the fewer suppliers and the more unique the product, the more power the supplier has to dominate over the business
competetive rivalry
if customers are easily able to find an alternative product from another business, it is more difficult for a business to compete on the product itself
threat of submission
the more competitors (businesses) in a market, the more difficult it is for a business to gain a competitive advantage, therefore the uniqueness of a product becomes more important
threat of new entry
power within an industry depends on the cost and ease of entry into a market. The easier it is to enter the industry the lower the power of a business to remain competitive
