sac 4 - AOS 1 reviewing performance - the need for change

Question 1

analysing business performance

Answer 1

> businesses measure their performance through key performance indicators
data gathered from kpis informs managers about the effectiveness and efficiency of different areas of the business
kpi data allows managers to make more informed decisions

Question 2

key performance indicators (9)

Answer 2

>percentage of market share
>net profit
>rate of productivity growth
>number of sales
>rates of staff absenteeism
>level of staff turnover
>level of wastage
>number of customer complaints
>number of workplace accidents

Question 3

benchmarking

Answer 3

benchmarking is being able to compare results against some sort of standard

Question 4

percentage of market share

Answer 4

a businesses share of the total sales in an industry for a particular good or service, expressed as a percentage.
calculated by number of sales of business divided by total number of sales in the industry.

Question 5

net profit

Answer 5

the amount of money left over after expenses have been deducted from revenue earned

Question 6

rate of productivity growth

Answer 6

the amount of inputs used and the rate in which it increases over time

Question 7

number of sales

Answer 7

the amount of goods or services sold in a specific period o time.

Question 8

rate of staff absenteeism

Answer 8

the number of employees that do not turn up to work when expected to be there

Question 9

level of staff turnover

Answer 9

the rate in which people leave the business and need to be replaced

Question 10

level of wastage

Answer 10

the amount of recourses and finished goods that are discarded during the production process

Question 11

number of customer complaints

Answer 11

the amount of people that are dissatisfied and or its products and have notified the business of their dissatisfaction

Question 12

number of workplace accidents

Answer 12

the amount of people injured or nearly injured at work due to unplanned events

Question 13

change management

Answer 13

> business change is the adoption of a new idea or behaviour by a business which is a result from pressures from the business environments. this means alteration of the business must take place.
business environments include factors such as economy, customers, employees, technology, competitors

Question 14

examples of business change

Answer 14

> woolworths and coles plastic bag ban- woolworths 20th coles 30th june 2018
driving forces
- societal attitudes- society is becoming more environmentally friendly
- competitors for coles as woolwoths implemented the ban and coles didn’t want customers to go to competitor for more environmentally friendly shopping
- reduction of costs
- persuit of profit
restraining forces
-organisational inertia as business may be scared that customers wont like the decision and resent the business

>dominos pizza checker- quality control to satisfy customers ad improve quality- may 2019
>driving forces
-technology
-competitors
-innovation
>restraining forces
-employees as they may need training or fear of using new technology
-financial considerations
-

Question 15

incremental vs transformationsal change

Answer 15

incremental - small continuous changes that occur regularly in the business
eg new process to improve efficiency
transformational - significant changes that are often impacting the whole business
eg a company restructure or a merger

distinguish- the difference between transformational and incremental change is the size and impact of the change. incremental change is small continuous changes that occur regularly in the business with smaller impacts, whereas transformational changes are significant and often impact the whole business.

Question 16

proactive vs reactive

Answer 16

> it is important that business are proactive rather then reactive
proactive means seeing changes in the dynamic environment and taking advantage.
reactive mean letting the business environments (economy, customers, employees, technology, competitors) impact the business before making changes

Question 17

driving forces (10)

Answer 17

driving forces are those factors that initiate or support change.
>driving forces push the business towards a new desired state
>include managers, employees, technology, innovation, pursuit of profit, reduction of costs, legislation, globalisation and societal attitudes, competitors

Question 18

managers (d)

Answer 18

> managers can initiate change after reviewing kpi data

>managers that are strong leaders can help drive the business towards the change

Question 19

employees (d)

Answer 19

> employees can drive change through innovation
they can place demands on the business to change conditions, policies and processes as they are the ones affected by change

Question 20

competitors (d)

Answer 20

> many industries are highly competitive

>competitors can drive a business to implement changes to gain a sustainable competitive advantage

Question 21

legislation (d)

Answer 21

> changes in laws can force a business to implement change.
legislation can change at federal, state or local level
eg changes to penalty rates in some industries

Question 22

pursuit of profit (d)

Answer 22

> businesses that are looking to increase profits, may implement changes to the business
eg marketing campaigns, expansions, or new product lines

Question 23

reduction of costs (d)

Answer 23

> costs eat into profit margins
reducing costa can help a business become more profitable
a business that has high costs can initiate change

Question 24

globalisation (d)

Answer 24

> globalisation is the process where economic boundaries are removed ad business begin operating on an international scale.
increases global competition
allows businesses to take advantage of global markets

Question 25

technology (d)

Answer 25

>technology can impact all parts of a business | >businesses may need need to implement technology to remain competitive.

Question 26

innovation (d)

Answer 26

>innovation is adopting something new or improving on what already exists >this could include - new production process - new or improved products

Question 27

societal attitudes (d)

Answer 27

>societies attitudes are constantly changing | >businesses that fail to keep up wth these attitudes risk falling behind

Question 28

restraining forces

Answer 28

>restraining forces are those factors that work against a proposed change >restraining forces make it difficult for the business to implement change successfully >businesses can look to reduce the impact of the restraining forces to help the change be successful >include; managers, employees, organisational inertia, financial considerations, legislation, time

Question 29

managers (r)

Answer 29

>managers on all levels can act as a restraining force against change eg middle or lower management may not support changes proposed by senior management or managers may not have the ability to lead a business through change

Question 30

employees (r)

Answer 30

>employees are the ones most impacted by the change >change can bring on feelings of fear and anxiety within employees causing resistance >if employees feel they havent been consulted or do not feel appreciated may look to resist change >change may have a negative impact on employees eg loss of employment

Question 31

time (r)

Answer 31

>businesses may find a lack of time will impact their ability to implement change successfully >businesses may be under pressure from competitors or in a poor financial position and need to act quickly

Question 32

organisational inertia (r)

Answer 32

>organisational inertia is a businesses lack of ability to respond to pressures and embrace change >cultures or management that are unenthusiastic to change can make it difficult to gather momentum towards the change >conservative or stuck in tradition

Question 33

legislation (r)

Answer 33

>legislation may block or make it difficult to implement change >tis can increase the costs of implementing a change eg the acc may block a proposed merger if it feels it will reduce competition in the market

Question 34

financial considerations (r)

Answer 34

>the immediate and long term costs of a proposed change may make it difficult for the change to be implemented successfully

Question 35

lewins force felid analysis theory

Answer 35

a process of identifying and analysing driving and restraining forces that affect a proposed change. steps; >identify driving forces >identify restraining forces >analyse ad rank each driving and restraining force due to how significantly they impact the change >create an action plan to reduce strength of restraining forces or increasing strength of driving forces - if driving and restraining equal then not likely to be successful - if restraining forces are higher then dont implement - if driving forces are higher then implement

Question 36

advantages of force feild analysis theory

Answer 36

>managers are able to identify and analyse the forces for and against the change >helps determine if the change is worth pursuing >allows managers to develop ways of reducing the restraining forces eg training >allows actions and timelines to be developed >identifies stakeholders that will likely be supported of the change and those that may resist the change

Question 37

porters generic strategies

Answer 37

>porter found that business are able to gain a competitive advantage by focusing on generic strategies >include lower cost strategy and differentiation strategy only should use one strategy EITHER low cost OR differentiation but cannot completely ignore each other

Question 38

lower cost strategy

Answer 38

>where a business is able to gain a a competitive advantage by becoming THE low-cost producer in its industry eg aldi >businesses can achieve this in a number of ways, including; - achieving economies of scale - implementing technology - preferential access to raw materials >by becoming the low cost producer, businesses can gain advantage in two main ways; -sell the good/service at or near the industry average, and therefore increasing the profit margins -prices can be reduced to become more attractive to the price sensitive customer >it is important that are deducting costs doesn't affect the quality ADVANATGES >strong competitive advantage in markets with 'price conscious' consumers DISADVANTAGES >potentially lower customer loyalty as customers are only price sensitive >potentially customer may associate lower price with lower quality >standardised goods and services will not meet the demands of customers who want unique, customer specific offerings or something different.

Question 39

differentiation strategy

Answer 39

>the differentiation strategy is where the business aims to be unique in its industry in some way that is valued ny its customers >this allows businesses to charge a premium price for the product >customers are attracted to a unique offering >differentiation can be achieved in a number of ways including; - high quality materials - patents - marketing - relationships - innovations - training - distribution ADVANTAGES >strong competitive advantage in markets with brand loyalty >can change to premium pricing as the cost is not such an important consideration to consumer >can work wth large businesses who have money to create a brand image >can work with small businesses who create a unique point of difference DISADVANTAGES >is not good for price sensitive consumers/markets >the unique features can be copied or mimicked by other producers domestically or overseas which destroys competitive advantage >can be hard to protect your intellectual property, copyright etc

Question 40

five competitive forces

Answer 40

>when deciding which strategy to implement, porter stares that businesses should understand the competitive forces that make up their industry >five competitive forces; - supplier power: how easy it is for customers to drive costs up - buyer power: how powerful buyers are in riving prices down - competitive rivalry: looks at the number and capability of competitors - threat of substitution: how easy it is for new competitors to find a similar good or service - how easy it is for new competitors to enter the market >which generic strategy? 1. analyse the competitive forces 2. determine what the businesses strengths are 3. compare the strengths to the competitive forces 4. decide the most appropriate strategy