U4 AOS1 Flashcards
define change
any alteration in the internal or external environments
changes which impact businesses:
- consumer tastes
- employee expectations
- the way things are perceived
- a new way of dealing with problems
define business change
the adoption of a new idea or behaviour by a business
- results in a difference in the form or operation of a business overtime
results of changes which impact businesses:
- modified corporate culture
- implemented new management structures
- recruited employees with new skills
- developed different work practices
the purpose of approaches to change
the ability to manage, embrace and adapt to change determines a business’s competitive advantage and survival
- successful managers are those who anticipate and adjust to changing circumstances, rather than be swept along passively or be caught unprepared
- the long-term survival of a business depends on the ability of its managers to scan the environment, predict future trends and exploit change
- change may be daunting, but the rewards are great
state the two approaches to change
proactive
reactive
define proactive approach
the situation where a change is planned and occurs before a business is affected by pressures in their environment
- anticipated, rather than be done by force
ways to determine the use of a proactive approach
- constantly observing business performance to identify problems before they occur
- forecasting likely events or trends in the market rather than waiting for them to occur
- regularly consulting employees, customers and professional analysts to identify opportunities to make the business more effective and efficient
the effectiveness of using a proactive approach
- the business is prepared when the change occurs, so that the change does not dramatically impact the business
- the business gains a competitive advantage due to not being negatively affected by the change in the environment
- enables long-term survival of the business as its managers scan the environment, predict future trends and exploit changes - leads to greater rewards than challenges
- the business’s objectives such as customer satisfaction, sales and profitability are less likely to be affected
define reactive approach
the situation where a change is unplanned, and takes place after the business has been affected by the pressures from its environment
ways to determine the use of a reactive approach
- observing competitors and then copying their processes, products and strategies
- dealing with a crisis and then creating policies to try and stop the crisis from happening again
- waiting for customers or employees to demand change and then responding to these changes
the effectiveness of using a reactive approach
- the business has already been affected by the change, potentially causing a loss in productivity and sales due to failure to recognise that the change was imminent
- the failure to respond immediately to the change reduces the time available to the business to recover
- the business can lose brand reputation and market share as other, more proactive businesses change faster - gaining a competitive advantage and new customers, while the business’s customers leave for other proactive businesses
good implementation of change vs bad implementation of change
good implementation of change
- changes occur at a pace that allows businesses to absorb and integrate them into their operations
- changes should be evaluated thoroughly to assess their overall impact
negative implementation of change
- poorly managed changes normally result in employee resistance, tension, anxiety, lost productivity, and consequently, unmet objectives
define key performance indicators (KPIs)
specific criteria used to measure the effectiveness and/or efficiency of a business’s performance
- provides data that can act as a driving force for change for a business
draws on information taken from a variety of sources, such as:
- accounting reports
- marketing statistics
- data gathered from customer or employee feedback
- from observation
establish objectives, develop strategies and evaluate performance (using KPIs)
state the 10 key performance indicators (KPIs)
P, N, DOUBLE R, DOUBLE L, 4 NUMBER
percentage of market share
net profit figures
rate of productivity growth
rate of staff absenteeism
level of staff turnover
level of wastage
number of sales
number of customer complaints
number of website hits
number of workplace accidents
define and explain percentage of market share
the business’s share of the total industry sales for a particular good or service, expressed as a percentage
having the largest market share
- the business is outperforming its competitors
an increase in market share
- the business is performing successfully
a decrease in market share
- other businesses are more proactive, so they are gaining more customers, leading to an increase in customer satisfaction, customer demand, sales and profitability
- while other businesses are increasing, the business is not meeting its objectives, leading to a decrease in customer satisfaction, customer demand, sales and profitability
define and explain net profit figures
the measurement of a company’s profit once operating costs, taxes, interest and depreciation have all been subtracted from its total revenue
this concerns investors/shareholders, as net profit figures are the source of their return on their investment
- monitored closely, as a significant net profit is expected, while a low or negative net profit makes them reconsider their investment
a significant net proft
- the business is performing successfully
a low net profit or a negative net profit (a loss)
- the business could be experiencing several problems, including reduced sales, poor customer service or inadequate management of expenses
define and explain rate of productivity growth
productivity
- a measure of performance that indicates how many inputs (resources) it takes to produce an output (a good or service)
rate of productivity growth
- the change in productivity in one year compared to the previous year
growth in the rate of productivity
- the business is using resources more efficiently
productivity will improve if a business:
- uses fewer inputs to obtain the same level of output
- more output is produced from the same input
a decrease in the rate of productivity suggests the opposite of this
define and explain rate of staff absenteeism
measures the number of workers who do not turn up for work when they are scheduled to do so
it is not uncommon for staff to have days off work
staff get sick, have family commitments, or other circumstances
- sometimes a sign of a positive relationship between the employer and the employee — if done openly and honestly, it shows that support and trust exist
sometimes employees may be absent from work because they are dissatisfied or demotivated
- a rising rate of staff absenteeism may indicate problems at work between the employer and the employees
- a decrease suggests the opposite (in a good way)
define and explain level of staff turnover
the number, or the rate, of employees who are leaving the business, for whatever reason, over a specific period of time, and needs to be replaced by new employees
some staff turnover is always to be expected as employees move on to new businesses for a variety of reasons including promotion or relocation
high or increasing levels of staff turnover
- problematic
- employees are not satisfied with their working conditions
staff turnover results in employees needing to be replaced, resulting in recruiting and training costs, and the loss of productivity and knowledge
a decrease suggests the opposite
define and explain level of wastage
the amount of unwanted or unusable material created by the production process of a business
- the volume of resources consumed by inefficient or unnecessary activities
- the amount of unwanted material left over from a production process
- output that has no marketable value
- material that from a consumer’s viewpoint doesn’t add value to a good or service
- any material discharged to, deposited in or emitted to an environment in such a quantity that it causes harm or damage
a business manages resources more efficiently by reducing waste, which can cut production costs
an increase of waste means more production costs, and inefficient use of resources
to reduce the level of wastage:
- making use of environmentally friendly packaging (recyclable or biodegradable)
define and explain number of sales
a measure of the amount of goods or services sold by a business in a given period of time
measuring the number of sales helps a business evaluate its performance, especially its marketing strategies
- such a strategy will lead to higher profits in the long term
- a marketing campaign is a strategy that is expected to increase the number of sales
a business will be satisfied with its performance when the number of sales increases over a period of time, even if it means lower profits in the short term due to higher marketing costs
define and explain number of customer complaints
the number of customers expressing their dissatisfaction with a business’s outputs, in a spoken or written form
disappointments can come from:
- the quality of the good or service
- the price of the good or service
- the customer service received for the good or service
e.g. US airlines disappointments come from delays/cancellations, food, tickets/check-in, staff, seats and aircraft and luggage
the number of complaints that customers make can also indicate whether they are satisfied with the way the business performs
- a successful business, aiming to maximise customer satisfaction, would receive a small number of customer complaints
- a large number of customer complaints means that there is a decrease in customer satisfaction, which can lead to loss of sales and profitability — objectives not achieved
some businesses understand that one customer complaint represents the ‘tip of the iceberg’ because for every customer who complains to the business, there are several customers who don’t
define and explain number of website hits
hit
- a request to a web server for a file such as a web page or image
- servers can monitor website activity and register whenever a web page receives a visitor (or a ‘hit’)
- there may be many ‘hits’ once a potential customer visits a web page, since a web page can contain multiple files, such as images and texts, which are ‘downloaded’
number of website hits
- the total number of visits to a website in a given period
businesses record how many potential customers visit its site or engage with the site following an advert or a link from a social media platform
a business can track how many of these ‘hits’ result in a purchase
- increase in hits means that the business is visible to customers, and an increase in brand awareness (increased search engine rankings) and sales results
- decrease in hits means that the business is not visible to customers, so the opposite occurs — a slow to no rate of sales results
define and explain number of workplace accidents
any unplanned event that results in personal injury or property damage at the workplace that is reported to management
- indicates how safe the workplace is for employees
an unsafe workplace impacts on the productivity of the business
- staff members who feel unsafe may not be motivated to work efficiently
- accidents that occur as a result of an unsafe workplace can actually stop production
an increase in the number of workplace accidents
- the workplace is unsafe for employees
- results in employees not going to work — slowing/stopping production and potential loss of sales
a decrease in the number of workplace accidents
- the workplace is safe for employees - production can continue and objectives are being met such as increase in sales
define force field analysis
outlines the process of determining which forces drive and which forces resist a proposed change
- for change to be successful, the strengths of the driving forces should outweigh the strengths of the restraining forces