transforming a business Flashcards
define business change
the adoption of a new idea or behaviour where businesses change as a result from pressures of the business environment
define incremental changes
small continuous changes that occur regularly in the business EG. new process
define transformational changes
significant changes that often impact the whole business EG. company restructure
define proactive
foreseeing changes in the dynamic environment and taking advantage
define reactive
letting business environments impact a business before changes are made
define key performance indicators
specific set of criteria that measure the efficiency and effectiveness of a business performance
what are the 9 key performance indicators
net profit percentage market share level of wastage number of workplace accidents number of sales number of customer complaints level of staff turnover rate of staff absenteeism rate of productivity growth
define benchmarking
being able to compare results against some form of standard
define driving forces
those that initiate or support change. push the business towards a new desired state
what are the 10 driving forces
managers employees legalisation innovation pursuit of profit competitors reduction of costs technology societal attitudes globalisation
managers (DF)
make decisions, can initiate change after analysis of KPI data
employees (DF)
drive change through innovation by placing demands on the business to change
competitors
competition can make a business change in order to gain a competitive advantage
legalisation (DF)
changes to laws can force a business to change
pursuit of profit
businesses are always looking to increase profit and gain money
reduction of costs
businesses have high costs, which can initiate change to lower costs and gain money
globalisation
process where economic boundaries are removed and businesses operate on an international scale
technology
businesses need to keep up with technology to remain competitive
innovation
adopting something new or improving on something that exists already
societal attitudes
businesses need to keep up with customer attitudes to keep their sales up
define restraining forces
those that work against a proposed change
what are the 6 restraining forces
managers employees time organisational interia legalislation financial considerations
managers (RF)
middle or lower management may not support the change made by senior management
employees (RF)
change can bring on feelings of anxiety or for people that don’t want to change which can cause resistance
time
businesses may not have enough time to implement change successfully
organisational interia
a businesses lack to embrace change. they ,ay be used to doing things certain way and therefore resist it
legalisation (RF)
may block or make it difficult for businesses to change things they want
financial considerations
businesses may not have enough money to implement the change
define force field analysis
process of identifying and analysing the forces that will drive and those that will resist a proposed change
what are the steps to implement force field analysis
- define target of change
- identify driving and restraining forces
- analyse forces to be changed (scores)
- develop an action plan
what are 2 benefits of the force field analysis
- managers able to identify whether it will be successful or not
- allows mangers to find ways of reducing restraining forces
define the lower cost strategy
where a business is able to gain a competitive advantage by becoming the low cost producer in the industry
how can businesses achieve lower cost stratergy
achieving economies of scale, implementing technology
define value chain
set of activities a business performs to add value to a good or service
strength of lower cost strategy
strong competitive advantage in markets with “price conscious” consumers
weakness of lower cost stratergy
potentially lower customer loyalty because customers are only price sensitive
define the differentiation strategy
where the business aims to be unique in its industry in some way valued by its customers
how can differentiation be achieved
high quality materials
marketing
innovations
strength of differentiation
strong competitive advantage in markets with brand loyalty
weakness of differentiation
unique features can be copied or mimicked by other producers
what 5 factors should businesses consider before deciding on a stratergy
- rivalry amongst existing competitors
- bargaining power of supplies
- entry of new competitors
- threat of substitutes
- bargaining power or buyers
define rivalry amongst existing competitors
if a business has many competitors, they may have reduced market attractiveness
define bargaining power of suppliers
how easy it is for suppliers to drive up the price of the item to supply to a business
define entry of new competitors
markets that are profitable will always attract new competitors, therefore they will always have new competitors to go against
define threat of substitutes
some businesses operate in environments where close substitutes exist e.g.. coke
define bargaining power of buyers
businesses need to consider how easy it is for buyers to reduce prices e.g.. bulk prices
