U4 4E driving forces part 1 Flashcards
All driving forces part 1
- owners as driving force
- managers as driving force
- employees as driving force
- pursuit of profit as a driving force
- reduction of costs as a driving force
Define owners as a driving force
- owners are interested in success of business from financial & personal reputation position
- is a major driving force for change as they want to improve return on investment
- owner as driving force may differ depending on type of business
how do owners drive change
- owners of sole trader / partnership businesses will drive to achieve ROI (return on investment) either personally / with partners
- shareholders of private limited companies / public listed companies will drive change to achieve capital gain / dividends
- owner of social enterprises driven to make profit & achieve substantial benefits for social cause
- government as owner of government business enterprise will want drive change for betterment of society as well as profits e.g Australis post
define roi (return on investment)
what the owner gains financially from the business compared to the sum they invested
Define managers as a driving force
- managers are interested in success of business from job security,
financial
and personal reputation position - likely to be major driving force to change
how do managers drive change
job security - may be contract of employment to initiate change in area
- or if owner desires change then manager may know that if not achieving then employment may be at risk
financial benefit - may be financial incentive in contract if achieve success in change
personal reputation - successful change can build personal status / also something they can put on resume or future positions
Define employees as a driving force
- employees interested in success of business from
- job security
- financial
- career development
- personal reputation
- likely to be a driving force for change to make business better meet needs or be broadly successful so can take pride in being associated with success.
how do employees drive change
- employees may be driving force in seeking better term / condition of employment
- as employees are often on frontline of business experiencing issues firsthand, may drive change to solve problems / create better outcomes for customers
- employees can also have new initiatives e.g suggestion box for new change that will advance business and own promotional opportunities
define pursuit of profit as a driving force
- fundamentally, pursuit of profit is what unite all businesses in study design
-however to lesser / greater extent depending on type of business
how does pursuit of profit drive change
public listed / private limited companies have shareholders
- who have strong interest in improving ROI via capital gain and dividends
- pursuit of profit still important to social enterprises, as without profit they have no funds to allocate to social but
- but it is probably less important than in other business types
- government businesses enterprises, whilst pursuit of profit is desirable, fulfillment of society needs is often mor important e.g Australian post
define reduction of costs as a driving force
- reduction of costs is closely linked to pursuit of profit
- but rather increasing revenue, its about reducing costs to create larger profit margin
how does reduction of costs drive change
- costs are often key driver of change
- can be reduced by businesses in number of ways
- each with own potential impact on quality, service or rep
e.g
marketing - cutting back on advertising
operations - using lean management / waste minimization strategy
- increase efficiency / reduce waste
- or material strategies like sourcing cheaper materials overseas
human resources - redundancies, outsourcing, or use overseas labor on lower wage rate
